Gold Sets 1st Full Week Above $5000 as Silver's Giant SLV ETF Also Grows

GOLD JUMPED and silver spiked to 4-week highs on Friday as solid inflows to bullion-backed ETF investment trust were followed by weaker-than-expected inflation figures from Germany but surprise strength in US factory-gate prices.

Silver leapt almost $3 per Troy ounce inside 30 minutes, peaking at $92.70, while London spot gold prices hit $5240 per Troy ounce, just shy of Monday's 4-week high.

Gold then edged back $15 into London's 3pm bullion auction, trading 6.7% beneath late-January's all-time spot market gold price peak near $5600.

But that still completed gold's first-ever 5-day week of benchmark fixings above $5000 per ounce.

Gold completed its first full week above $4000 only last October, and it made the first full week of 3pm London gold fixes above $3000 per Troy ounce 7 months before that.

"The current gold cycle is 39 months old," reckons precious metals strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp, dating this bull market from the post-Covid lows of October 2022.

"With gold up 210%, silver up 350% and the US Dollar down 13%, that's a mid-cycle performance profile by historical standards."

Giant gold-backed ETF investment fund the GLD yesterday expanded 1.8% to need 1,097 tonnes of bullion backing, the most since late-April 2022.

World No.2 gold ETF trust the IAU shrank a little but, like the GLD, it also headed for an 8th consecutive month of expansion, needing 499 tonnes of bullion backing.

Silver's giant SLV ETF meantime swelled by 3.7% on Thursday, needing 16,095 tonnes of bullion and heading for its first weekly addition in three as well as a monthly net inflow, albeit smaller from the 1,000-tonne jump to 16,546 made on 2nd February as the industrially-useful precious metal extended the steepest silver price crash since the early 1980s.

"If gold [were] to mirror average cycle duration and performance," says Shiels at MKS, "that implies $6750 by October [ie, the] US mid-term elections.

"The 1976-1980 cycle saw silver rocket 1,094% − nearly 1.5x gold's already impressive 721% run."

Germany's consumer cost of living rose only 1.9% per year this month said national data agency Destatis on Friday, the weakest pace of inflation in any February since 2021, and back below the European Central Bank's region-wide target of 2.0%.

France and Spain, in contrast, both estimated higher-than-expected inflation at 1.1% and 2.5% respectively.

Core US producer price inflation, which excludes fuel and food costs, jumped to 3.6% per year in January the Bureau of Labor Statistics then said on Friday, the highest since July 2023.

Yet betting that the Federal Reserve will start to cut interest rates again in June rose back above 50% on derivatives exchange the CME's FedWatch tool, rallying from the market's weakest such view in 7 months.

Longer-term US borrowing costs also fell, with the yield on 10-year Treasury bonds dropping to the lowest since late-October beneath 4.0% per annum.

That also put the real rate of interest − as judged by bond-market yields on the Treasury's inflation-protected TIPS − down at the lowest in 4 months, slipping to 1.69% per annum.