Precious Metals Surge, Consumer Sentiment Hits New Low

Physical precious metals and metal miners exchange traded funds rallied Friday after a pullback in U.S. consumer sentiment diminished fears that the Federal Reserve would taper its bond purchasing program early.

Among the best performing non-leveraged ETFs of Friday, the Global X Silvers Miners ETF (NYSEArca: SIL) rose 2.6%, the U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) advanced 2.6%, and the Sprott Gold Miners ETF (SGDM) increased 2.4%.

Meanwhile, the iShares Silver Trust (SLV) was up 2.3%, the Sprott Physical Silver Trust (PSLV) added 2.1%, the SPDR Gold Shares (NYSEArca: GLD) was 1.4% higher, and the Sprott Physical Gold Trust (PHYS) gained 0.9%. Comex gold futures pushed 1.6% higher to $1,780.5 per ounce and Comex silver futures increased 2.8% to $23.8 per ounce.

Precious metals are rebounding after plunging to an over four-month low on Monday due to fears that the Federal Reserve would roll back its economic support in response to the upbeat U.S. jobs report last week, Reuters reports.

“The crash in gold was a little overdone and we’re beginning to see the reality that economic stimulus in the U.S. and worldwide is going to continue,” Jeffrey Sica, CEO of Circle Squared Alternative Investments, told Reuters, adding that central banks would remain diligent when tapering given a surge in COVID-19 cases.

Lessening market fears of any tapering, the University of Michigan’s preliminary consumer sentiment index was at a decade-long low in early August.

The U.S. dollar also depreciated after the survey results, which strengthened gold’s appeal.

“The picture remains nuanced; as positive signs in the labor market and spikes in producer prices support the view that the Fed will bring forward the timing of tapering, but the latest consumer price increases supported the view that inflation spikes are transitory,” Ricardo Evangelista, a senior analyst at ActivTrades, told Reuters.

“Amidst the mixed signals, investors anticipate what will emerge from the Fed’s Jackson Hole meeting later this month.”

Emerging market buying, notably from consumers in China and India, also supported physical demand for gold bullion.

“The hope is that India’s demand recovery in particular is going to be a sustainable trend, keeping gold prices from breaking significantly lower,” TD Securities commodity strategist Daniel Ghali told Reuters.

For more news, information, and strategy, visit the Gold & Silver Investing Channel.