Gold and Silver Rise Again with Stocks as AI Bubble Doubts Spread

GOLD and SILVER PRICES rose Friday alongside global stock markets as investors continued increasing their bets that the Federal Reserve may not raise US Dollar interest rates after all in 2026.

After ending last Friday with gold's strongest weekly gain since the start of the Covid Crisis in March 2020, the price of gold today traded 1.3% higher again, heading for its highest week-end level since May at $4390 per troy ounce.

Silver also extended last week's steep gain, adding another 0.4% to that 11.4% leap in US Dollar terms at today's 12 noon auction in London before rising $1 further to more than $65.35 per ounce in spot trade.

A solid opening for New York's record-high stock market meantime put global equities on track to bank a third week of gains at a fresh all-time high on the MSCI World Index.

"It is important to recognise that gold's performance relative to other assets, particularly equities, has been highly unusual," says Justin Lin at Global X ETFs, part of $845bn Korean asset management group Mirae.

Gold's rolling 90-day correlation with global equities recently hit 0.74, Lin says − "its highest level since the metal returned to open market trading following the collapse of Bretton Woods" fifty-five years ago tomorrow.

"We expect gold to decouple from equities over the near to medium term...[and while] past performance is not a reliable indicator of future performance...over the past 50 years, gold has outperformed equities by an average of 6.5% in the 90 days following [the 5 previous] periods in which their correlation exceeded 0.6."

Contrary to gold and silver, industrial precious metals platinum and palladium − which find their largest single use in autocatalysts to reduce harmful emissions from fossil-fuel engines − fell back Friday, slipping $8 for the week to $1740 and dropping $60 to $1317 respectively as the price of oil cut its weekly gain from 6.5% to 4.0% at $86 per barrel of Brent crude.

"Bottom line, macro," said a note this week from metals strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp, "[we have] an economy on autopilot, a Fed in no hurry to hike, Yen intervention reviving debasement worries, and oil holding a delicate balance.

"All are pointing the same way for gold − higher floors, with ETF flows still building rather than stretched into $4500."

Back in the stock market, the share price of chat-room website Reddit (NYSE: RDDT) − now trading at 36 times earnings and never yet paying a dividend after floating 2 years ago − jumped overnight on news it will be included in US benchmark the S&P500 from next week, forcing ETF tracker funds now running around $2 trillion between them to buy the stock.

AI chip-making giant Nvidia (Nasdaq: NVDA) meantime set its highest price since the all-time record of mid-May, rallying further from Monday's drop when it announced a half-trillion dollar financing deal with Wall Street giants Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR.

"AI boom's profits are currently being funded by investors rather than earned from customers," said analysis from Apollo's chief economist Torsten Slok last week.

"[This] is what the top of a boom looks like," writes financial crisis' banking-bear Michael Burry as he increases his bearish short bets against the AI sector.

"Circular financing will end badly," CNN quotes Max Gokhman, head of AI investment at financial giant Franklin Templeton, referring to how AI giants such as Nvidia are 'investing' in cloud service providers by effectively lending them the money to buy its chips.

"You are living on not just borrowed time, but levered time."

Unlike gold and silver prices, Western government bonds fell Friday, edging bond yields higher, after the US federal government reported spending $432 billion more last month than it earned − the worst deficit since the Covid pandemic and far beyond analyst forecasts.

"Every dollar lost to this Great Transshipment Scam is a dollar stolen from American workers, manufacturers, and taxpayers," says the administration of President Trump, accusing dozens of countries of enabling China to beat US import tariffs by re-routing its goods through their ports and threatening retaliatory action.

But with Washington set to pay over $1.2 trillion in interest to service its debt this year, trading in Fed Funds futures today put the odds of 'no change' at the US central bank's September meeting at nearly 7-in-10, up from only 1-in-3 at the end of July following last week's shock US jobs data and this week's softer inflation figures.

Year-end rates are now forecast at 3.83% according to the CME derivatives exchange's FedWatch tool, less than one 0.25-point rise above the current effective rate.