(Kitco Commentary) - The best-performing precious metal for the week was platinum, up 4.15%. Platinum reached its highest price level since 2014.
Strengths
- Prices have been driven by an 8.8% surge in imports into China in May to 12.6 tons—the highest since April 2023—highlighting strong demand as prices have climbed over 40% year-to-date. Traders report large spot market purchases contributing to market tightness, even as some anticipate profit-taking near $1,300 an ounce.
- According to data released by the People's Bank of China, the central bank added 60,000 ounces to its gold reserves in May, marking its seventh consecutive month of net gold purchases, bringing the total to 73.83 million ounces. Gold now accounts for 7% of the country's international reserve assets, a sharp increase from levels prior to the pandemic and Russia's invasion of Ukraine.
- Avino Silver & Gold Mines has renewed its at-the-market (ATM) equity program, allowing the company to sell up to $40 million in shares directly into the U.S. market at prevailing prices. This flexible structure enables Avino to capture stronger share prices in real time, helping to fund growth initiatives more accretively and with less dilution than traditional equity raises.
Weaknesses
- The worst-performing precious metal for the week was gold, down 2.01%. Gold is set for a weekly decline as easing Middle East tensions and the Fed’s inflation warnings have dampened safe-haven demand and lowered expectations for rate cuts. Despite the pullback, gold remains up over 28% year-to-date and continues to trade just below its April record high of $3,500.10 an ounce.
- A Malian court has ruled that Barrick Mining Corp.’s Loulo-Gounkoto gold mining complex should be placed under provisional administration for six months, handing control of one of the Canadian company’s largest operations to state-appointed management, according to Bloomberg.
- Chris Brightman of Research Affiliates argues that gold is not the safe haven it is often claimed to be. "Gold is very volatile. If you think of it as a store of value, you are missing the boat. It is a speculative asset," Brightman, Research Affiliates' CEO and chief investment officer, told Barron's. Ironically, Brightman overlooks key facts: the S&P 500 is more volatile than gold, and the U.S. 10-year bond is even more volatile than the domestic equity market. Yet he suggests investors should avoid gold, so where exactly does he propose they hide?
Opportunities
- According to Scotia, Dundee will acquire all outstanding shares of Adriatic at a purchase price of $3.62 per share, representing a 16.6% premium to Adriatic’s share price and a total equity value of $1.3 billion. The transaction consideration includes a cash component of $437 million and 0.1590 DPM shares for each Adriatic share held, resulting in the issuance of 54.9 million DPM shares. Dundee’s share price did not decline significantly following the deal, as investors recognized the expected value accretion.
- As reported by Bank of America, central banks have continued to increase their allocations and now hold just under 18% of outstanding U.S. public debt, up from 13% a decade ago. This trend should serve as a warning to U.S. policymakers. Ongoing concerns over trade tensions and U.S. fiscal deficits may drive more central banks to shift purchases from U.S. Treasuries to gold. The U.S. budget deficit, interest rates, and the strength of the dollar will be key drivers for gold in the second half of 2025—and could help push prices toward $4,000 per ounce.
- Since President Trump took office, the U.S. dollar has lost over 10% of its value against the euro, pound, and Swiss franc, and is down against every other major currency. This has clearly improved sentiment toward gold as a haven asset. Investors are concerned about the scale of proposed budget cuts, and with tariffs added to the mix, the result is a formula for economic slowdown. The economy risks stalling as policy decisions are delayed amid growing uncertainty, while the administration remains singularly focused on its social agenda.
Threats
- "In the last couple of years, gold has been the solution to whatever scares you," said Jim Paulsen, a former market strategist for The Leuthold Group and Wells Fargo, who now writes on Substack. "It has been riding the wave of a persistent and growing pessimism bubble." He added, "Expanding and intensifying fear is what drives the price of gold higher. However, once pessimism becomes extreme, the price of gold often nears a peak."
- Gold is expected to fall back below $3,000 an ounce in the coming quarters as its record-setting run loses momentum, according to Citigroup Inc., which is calling time on one of the standout rallies in commodities. “Our work suggests that gold returns to about $2,500 to $2,700 an ounce by the second half of 2026,” analysts including Max Layton wrote in a report.
- Price gains for gold have been muted, even as Israel and Iran continue to exchange strikes. “At first sight, gold’s reaction may be surprising, considering the potential consequences of the conflict and also the typical skittishness of the more short-term-oriented traders in the market,” said Carsten Menke, head of next generation research at Julius Baer Group Ltd. “But a closer look suggests that it is in line with the historical pattern of such geopolitical shocks not lastingly lifting gold prices.”
