Gold, Silver, Copper: An Optimistic Outlook?
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Global Considerations for Gold

Lower rates and a continuation of geopolitical risks provide major tailwinds for gold. Amid this ongoing uncertainty, Micro Gold futures July ADV increased 68% to 106,000 contracts as more market participants turned to the safe haven asset.

Additionally, central banks worldwide have been buying gold at record levels. Led by China, central banks purchased 1,037 tonnes of gold in 2023, according to the World Gold Council (WGC). WGC annual survey data showed that 29% of central banks expected their own gold reserves to increase in the next 12 months.

gold reserve central banks

Gold/Silver Ratio Remains High

Micro Silver futures have gained this year due to strong demand for its utility in emerging technology, especially given that it can conduct electricity faster than any other metal. The Silver Institute reported a 184.3 million-ounce deficit in 2023 on the back of robust industrial demand. Demand continues to outpace supply and deficits will likely persist beyond 2024 due to the expanding industrial demand for silver. 

metals futures adoption

The correlation between silver and gold is also widely watched. The gold/silver ratio is calculated by taking the current price of an ounce of gold divided by the current price of an ounce of silver. Historically, when the ratio has topped 80, it has signaled that silver is inexpensive relative to gold. The last three times this happened, silver rallied 40%, 300% and 400%. When the ratio has fallen below 20, it has signaled that gold is inexpensive relative to silver.

gold silver ratio

Currently, the ratio remains historically high. The most recent example of silver being inexpensive compared to gold was back in 2020 at the beginning of the COVID-19 pandemic when the record gold/silver ratio reached 123:1 but then quickly moved back closer to 60:1.

The possibility of interest rate cuts and ongoing geopolitical events all provide potential momentum for gold and silver to rally through the end of the year. Copper, with its closer ties to economic data coming out of China, could find itself trailing comparatively for the near future. 

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