It is one record after another for gold. The yellow metal cleared the $5,200 as well as the $5,300 marks on Wednesday for the first time in history as the rally continued.
Silver prices on COMEX also kept up the charge as the metal breached $116 for the first time ever.
Additionally, oil prices also rose more than 1% to more than a four-month high as a winter storm in the US disrupted production and refinery operations.
The US dollar’s drop to a four-year low against major currencies is intensifying investor worry regarding the uncertain trajectory of US policy. Against this backdrop, base metals were all seeing higher trading.
Investors patiently await the outcome of the US Federal Reserve’s two-day policy meeting later on Wednesday.
More records for gold
Demand for gold, a traditional safe-haven asset, was driven higher by growing concerns about the US dollar’s stability and the independence of the US Federal Reserve.
This surge in demand propelled the metal’s price past $5,300 per ounce for the first time on Wednesday.
On Wednesday, the dollar remained near its four-year lows, a position maintained even after US President Donald Trump downplayed its recent decline.
This weakness in the dollar made gold, which is priced in the US currency, a more appealing purchase for international buyers.
Building on last year’s record gains, the metal has already seen a surge of over 20% since the beginning of this year.
According to analysts at Deutsche Bank, gold is projected to reach $6,000 an ounce this year, a forecast driven by sustained investment demand.
“Gold is well and truly back in the headlines, having been largely ignored during last year’s run to a succession of all-time highs,” said David Morrison, senior market analyst at Trade Nation.
Well, it’s got the headlines it deserves now. But these may be coming a bit too late for new investors jumping on the bandwagon.
Similar to gold, the silver market is experiencing discussions about new paradigms, significant industry demand, and stock shortages, which are causing disruptions.
Gold prices on COMEX were at $5,286.30 per ounce, up 3.2%, while silver was 7.5% higher at $113.800.
Silver had hit a record high of $116.110 an ounce on COMEX.
Oil prices jump
Crude oil prices reached their highest level since late September on Wednesday, driven by several factors.
A winter storm disrupted US crude output, while a weaker dollar and ongoing outages in Kazakhstan provided additional upward pressure.
The sentiment surrounding oil appears to have undergone a significant reversal.
Oil prices have clearly broken the downtrend that had been in place since last summer and now seem well-positioned to trade comfortably above the $60 per barrel mark.
A significant winter storm blanketed the US, causing exports of crude oil from US Gulf Coast ports to plummet to zero on Sunday, according to the ship-tracking service Vortexa.
However, these exports saw a rebound on Monday.
“This recent push higher was driven by supply concerns after a severe winter storm across the east of the US which knocked out roughly 15% of national output and halted crude and LNG exports from Gulf Coast ports,” said Morrison.
Also, the oil price rally is partly fueled by production losses in Kazakhstan.
While the OPEC+ member hopes to see a gradual resumption of output at the Tengiz field within a week, sources suggest the recovery could take longer.
Separately, the pipeline operator CPC, which is responsible for approximately 80% of Kazakhstan’s oil exports, has fully restored its loading capacity at its Black Sea terminal.
The price of West Texas Intermediate was at $63.12 per barrel, up 1.2%, while Brent was at $67.15 a barrel, up 0.8%.
Base metals higher
Base metals were mostly higher on Wednesday as the US dollar dropped to its lowest level against major currencies in four years, intensifying investor worries over the unpredictability of US policy.
Despite this, Trump expressed confidence on Tuesday, stating the dollar is performing well. He dismissed concerns about its decline and indicated that he anticipates exchange rate fluctuations.
“Although Trump appears unconcerned about the dollar’s depreciation, commentary suggests the dollar’s decline is not over,” Neil Welsh, head of metals market at Britannia Global Markets, said in an emailed commentary.
In the long term, structural factors such as Fed independence, widening budget deficits, concerns related to fiscal profligacy, and political polarization are putting downward pressure on the dollar.
Market sentiment is currently cautious, with some market bulls opting to take profits.
This is primarily due to the lack of clarity surrounding the US Federal Reserve’s interest rate cut trajectory, compounded by geopolitical uncertainties stemming from US actions in Iran and Venezuela. Attention is now fixed on the upcoming Fed interest rate decision.
According to Goldman Sachs Group, the current rally in base metals may soon face challenges.
Bullish market sentiment and high prices are beginning to conflict with weaker demand from manufacturers, particularly in China.
The firm’s copper market survey revealed a 10% to 30% drop in fabricators’ order books, as industrial users reduce activity. Even demand from grid orders is starting to slow down.
Goldman Sachs, previously more bearish on aluminium, has increased its price forecasts for the metal.
The bank now projects aluminum will average $3,150 a ton in the first half of the year, a rise from its previous forecast of $2,575, though this figure remains below current market prices, according to a recent note.
The three-month copper contract on the London Metal Exchange was at $13,165 per ton, up 1%, while the aluminium contract was at $3,289.50 a ton, up 2.5%.
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