Bullion Markets Surge as Fed Rate Hike Expectations Weaken Dollar
The global market experienced a significant rally in bullion markets this week, with gold rising by over 7% and silver increasing by more than 10%. The gains were driven by softer labor-market data, which strengthened expectations that the Federal Reserve may delay further rate hikes. This in turn weighed on the US dollar and Treasury yields, making non-yielding precious metals more appealing.
The rally was also fueled by bargain hunting, as investors took advantage of previous sharp pullbacks to re-enter the market. Silver outperformed gold due to its sensitivity to expectations for lower interest rates and improved economic activity.
The demand from China added further momentum to the rally, with gold-backed ETFs recording inflows and the country's central bank accumulating bullion reserves for 21 consecutive months.