HG MARKETS:

Metals have shown strong performance over the past few years, largely because of how global currencies lost value after the COVID-19 pandemic. Central banks’ widespread use of Quantitative Easing (QE) and balance sheet expansion put pressure on traditional currencies, providing a strong boost to precious metals.

However, the global interest rate hikes in 2022 temporarily curbed these gains. Tighter monetary policies helped restore some purchasing power to fiat currencies by reining in inflation expectations. This effect has since faded as global policy rates have started to decrease since their peaks in 2023.

This period echoes the 2004-2011 era, when Gold surged from approximately $400 to $1,880 per ounce, significantly driven by the first round of QE following the 2008 Global Financial Crisis. More recently, Gold has more than doubled its value since October 2022, pulling up other precious metals like Platinum, Palladium, and Silver.

Silver mirrored this trend, rocketing from $6 to an all-time high of $49.80 before a subsequent correction, partly due to miners increasing production in response to the high prices. Silver prices surged past $37 per ounce on Friday, hitting a more than 13-year high. This climb was driven by increased demand for safe-haven assets amidst escalating global trade tensions.

The rally was triggered by recent announcements from U.S. President Donald Trump, including a 35% tariff on Canadian imports effective August 1st, and indications of broader 15% to 20% tariffs on most other trading partners. Earlier in the week, the U.S. also imposed 50% duties on copper imports and Brazilian goods, and issued tariff warnings to nations like Japan and South Korea.

However, the strengthening U.S. dollar somewhat curbed further gains in silver. This dollar strength was influenced by ongoing market evaluations of the Federal Reserve’s monetary policy outlook. Chicago Fed President Austan Goolsbee reinforced the central bank’s stance that its focus remains on employment and inflation, not on managing government debt through interest rate adjustments.