Gold's Price Drop May Not Be as Bearish as It Seems

Gold's price fell to $4,397.56 today, down about 0.7% intraday.

The metal is under pressure from traders betting on a September rate hike, but this doesn't tell the whole story.

Copper touched an all-time high on the London Metal Exchange at $14,617 to $14,703 a ton, its second straight record session. It's up roughly 18% this year.

Supply is tight outside the US, and traders are shipping copper into American warehouses ahead of an expected tariff on refined imports.

This shortage has driven copper prices higher, not just because of physical demand, but also due to its correlation with other hard assets like gold and silver.

The bank UBS raised its outlook for silver this week, expecting it to reach $70 by December 2026 and $80 by September 2027.

UBS sees the near-term dip as tactical and driven by the same Fed rate-hike bets pressuring gold.

Newmont and Barrick, two major gold miners, are trading at valuation discounts despite posting strong margins and active share buybacks.

This is because once gold sits at these elevated prices, a miner's production costs stay roughly fixed while revenue per ounce increases, leading to expanding margins.

Gold miners have outperformed bullion on down days recently, as their operating leverage provides a cushion against rising bond yields.

Tether CEO Paolo Ardoino stated that the company buys one to two tons of physical gold every week, funded from its own operating profit.

This move is notable because Tether issues digital dollars and wants an asset with no counterparty behind it, which has value for its customers who don't get this same deal.