This article first appeared on GuruFocus.
Market participants have been positioning for further upside in precious metals as softer US inflation data has reinforced expectations that borrowing costs could move lower. After the latest core consumer price index showed the slowest pace of increase since early 2021, investors observed conditions that could continue to favor non-yielding assets. Spot gold (GLD) was trading near $4,320 an ounce during Asian hours on Friday and was on track for a second weekly gain, while silver hovered close to record levels. The inflation signal has been supportive, even as the data was partly clouded by the impact of a record six-week US government shutdown that ended last month.
The policy backdrop has remained uncertain despite the Federal Reserve delivering its third consecutive rate cut last week. Officials have offered limited guidance on how quickly further easing could unfold, with traders pricing roughly a 25% chance of another reduction in January. US President Donald Trump has continued to advocate for more aggressive rate cuts next year. In Asia, currency markets reacted to the Bank of Japan’s decision to raise interest rates to the highest level since 1995, with the yen weakening after policymakers refrained from signaling additional tightening. At the same time, geopolitical developments, including escalating US pressure on Venezuela through a blockade of sanctioned oil tankers, have added to gold’s appeal as a potential haven.
Precious metals have delivered an exceptional run this year, with both gold and silver heading toward their strongest annual performances since 1979, supported by sustained central-bank buying and inflows into bullion-backed exchange-traded funds. Platinum has also surged, rising for a seventh straight session and trading near a 17-year high above $1,980 an ounce, as signs of tightening supply in the London market and robust exports to China lifted prices. By midday in Singapore, gold edged 0.3% lower to $4,320.88 an ounce, silver slipped 0.3% to $65.32, platinum eased, and palladium was little changed, while the Bloomberg Dollar Spot Index ticked up 0.1%.