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Gold popped almost $US50/oz yesterday evening, posting another fresh all-time high in the process as investors/traders further digested last week’s market-friendly PCE Index data. The Fed’s preferred gauge of inflation is cooling which suggests the Fed is getting ever closer to cutting rates. The precious metal is also enjoying the added tailwind of powerful Chinese demand and ongoing global political tensions, what’s not to like? Gold has surged ~12% over the last six weeks, and with no near term end in sight for the three bullish drivers mentioned previously, we can see it testing $US2400-2500 before Christmas.

• Gold, like bonds, is looking for a rate cut in June, which will present a risk for the complex at the end of May/start of June. The Fed meets on the 11^th and 12^th of June.

The Chinese demand for gold is across the investment spectrum, from the PBOC to the younger generations, where it’s becoming increasingly popular. Even US-leading investment banks like precious metals, with JP Morgan calling it their number one pick in the commodity space, believing it can reach $US2,500/oz, while Goldman Sachs is calling it ~$US2,300, aided by lower bond yields moving forward.

• Gold stocks aren’t yet fully embracing the commodities move, but some of the sector has started to rally nicely since the start of March, e.g. Evolution (EVN) +26%, and Newmont Corp. (NEM) +18.6%.

Silver’s performance has been lacklustre compared to its precious metal colleague, with China’s appetite missing from the equation, but we still believe it will test its post-COVID high at some point this year.

• We can see silver testing $US30/oz through 2024/5, or 20% higher.