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Commodities - JULY 10, 2019

Precious metals rally in 2019

by Larry Gray

After a prolonged malaise, precious metal stocks have regained some of their luster in 2019. Gold and palladium prices have marched higher; gold has soared to its highest price since 2013, while palladium has spiked to record highs this year.

The Dow Jones Precious Metals Index reported a year-to-date total return of 22.32 percent through the first six months of the year, quite a turnaround from last year’s performance of –11.22 percent.

A modestly weaker dollar, economic uncertainties and geopolitical tensions have contributed to the gold rally.

UBS strategists Joni Teves and Roque Montero recently increased their three-month gold target to $1,430 from $1,380 an ounce. “A few years and several false starts later, we think the macro backdrop has now started moving more convincingly in gold’s favor,” the analysts said, though they added that the route for gold is “unlikely to be a straight path higher.”

They still maintain gold will end the year under that $1,400 level, adjusting their year-end target to $1,370 from $1,325 an ounce. The forecast for end-2020 was lifted to $1,450 from $1,350.

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