Precious metal prices rose over the week, with gold up $30 and silver up 32 cents.
Platinum closed yesterday up over $50 on the week, but palladium was unchanged. Silver is now up 4% on the year and gold is at break-even.
Driving precious metal prices was dollar weakness, and the widely-followed US Dollar index (DXY) is now technically vulnerable to a significant drop. This weakness ties in with a gradual acceptance that dollar interest rate rises are on hold indefinitely. Furthermore, the usual chorus of Keynesian economists is beginning to talk about the necessity of negative interest rates, which would probably guarantee a substantial fall in the dollar, and a corresponding rise in commodity prices, bringing about their desired increase in price inflation.
Negative interest rates would make it more costly to hold dollar cash than gold, with obvious price consequences. It is therefore logical that the bearishness over gold and silver that has prevailed in futures markets until recently is replaced by some genuine buying demand. The next chart shows how this has been reflected in Comex futures for gold, where a rising price has been underpinned by a rise in Open Interest.
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