Silver and gold have dipped this week, facing headwinds from a stronger U.S. dollar. The U.S. dollar’s rally against other currencies makes dollar-denominated gold more expensive for holders of other currencies and is therefore bearish for precious metals. A ceasefire last week between Israel and Hezbollah has also reduced bullion’s attractiveness as a safe haven asset. But where will precious metals go from here in the short term?
Investors will be turning their attention to the release of the U.S. November jobs report at the end of the week for signals on monetary policy and the health of the economy. Fed policymakers voted unanimously at November’s meeting to cut interest rates by 25 basis points, after also cutting rates in September. Interest rate cuts are typically bullish for gold and silver. About two-thirds of the investors are betting that the Fed will cut rates by another 25 basis points in December, ending the year at 4.25% to 4.50%.
Gold and silver are neck and neck for gains as we face the final weeks of 2024. Gold is up 29% for the year, dropping 2.5% last month after rising 3.4% in October and gaining 5.2% in September.
Silver is also up 29% in 2024. It fell 5.2% in November after advancing 4.3% in October and rallying 7.9% in September.
The dip in November has provided an excellent opportunity for investors to obtain gold and silver below recent highs. We expect further consolidation at this level before gold and silver advance in 2025. Key fundamentals are still in place for the precious metals bull market to continue over the next few years.
According to analysts and experts, we may see gold as high as above $5,000 an ounce and silver as high as $90 an ounce, if historical patterns are to be believed. The last bull market saw spot price gains of 2-3 times the lows. The patterns of rallies and consolidations of gold and silver these past few years is supporting another bullish market cycle with several more years to go before it peaks.
While gold has broken records all year long, attaining 39 new record high closes, silver has yet to approach its previous bull market high of $50 an ounce. While silver bugs may be disappointed, it is important to note that historically, silver tends to lag behind gold well into a bull market cycle, before overtaking gold's gains explosively. This makes the perceived lethargy in silver spot prices right now a perfect opportunity for investors who might be looking for the profit potential in this market.
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