According to Kitco, the strong increase in gold and silver this month shows no signs of cooling down, as investors are flocking to find safe havens amid growing economic and geopolitical instability.
The gold and silver market jumped last night after the US Federal Reserve (Fed)'s decision to keep interest rates unchanged - which was predicted in advance - as well as subsequent statements by Fed Chairman Jerome Powell.
The upward momentum of precious metals is now almost creating its own momentum, increasingly attracting more cash flow" - said Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals.
According to Mr. Grant, gold is still in a state of over-buying and there is a risk of correction, but strong buying power every time prices fall continues to support the upward trend.
The Fed kept interest rates unchanged, saying that inflation remained high while economic growth was maintained steadily, but in its latest policy statement, the central bank did not give a clear signal of when it could cut borrowing costs.
Both Governor Christopher Waller - a potential candidate to replace Mr. Powell when the Fed Chairman's term ends in May - and Governor Stephen Miran, who is currently on leave as a White House economic advisor, voted against, supporting a 0.25-percentage interest rate cut.
Precious metals simply don't care much about the Fed being in a'rest' rather than a'pause', as the entire metal group still traded upwards throughout the press conference," said Tai Wong, an independent metal trader.
Mr. Powell said that inflation in December is likely to remain significantly higher than the Fed's 2% target. Meanwhile, US President Donald Trump said on Tuesday that he would soon announce the person chosen to replace Mr. Powell.
According to Reuters, US President Donald Trump's tough statement on the Iran issue has increased concerns about geopolitical risks, thereby promoting cash flow to safe assets such as gold.
Iran immediately sent a tough message, affirming its readiness to respond to any moves that harm national interests. The statements exchanged between the two sides have increased concerns about geopolitical risks in the Middle East - a region that is sensitive to the global financial market.
OCBC analysts commented in a report: "The increasing public debt burden, geopolitical concerns and policy uncertainty have fueled a structural repositioning of gold's role in the investment portfolio.
Gold is no longer just a tool to prevent crises or inflation, but is increasingly seen as a neutral, reliable asset to retain value, while helping to diversify portfolios in many different macroeconomic scenarios.
In another development, Tether cryptocurrency group is expected to allocate 10-15% of its investment portfolio to physical gold, according to CEO Paolo Ardoino, thereby adding to the amount of gold that the company said is being used to secure some of its products.
Spot silver prices rose 3.3%, to $116.69/ounce, after hitting a record high of $117.69 on Monday. Since the beginning of the year, silver prices have increased by more than 60%.
“Some indicators for silver suggest that prices may adjust in the short term,” Standard Chartered analysts said in a report.
