Gold and silver have seen a bumpy start to June, with both metals pulling back from recent highs as markets weigh up the likelihood of when the Federal Reserve will make their first cut.

Gold has been trading in a fairly tight range for the past two weeks since pulling back from $2,400/£1,900 but has so far held on to $2,300/£1,800 and remains up over 10% in the past three months.

040624 USD Chart

After beating gold in gains, silver has seen prices fall sharply in the past two weeks. Silver has fallen below $30 per ounce today for the first time since breaking past it three weeks ago but continues to be volatile, trading above and below this key level today. Although the pullback looks dramatic, silver is still up over 28% in the past three months and a period of consolidation around $30 will still leave silver in a strong position heading into Q4 when things should heat up.

There is still plenty going on in financial markets right now however that continues to impact gold and silver.

- One of the bigger stories of late has been India’s repatriation of 100 tonnes of gold from the UK. India has kept over 400 tonnes of gold outside of the country for years, and the Bank of England has long been a popular custodian for many countries to entrust their gold to. The Indian government however requested that 100 tonnes of their gold reserves be sent home to the Reserve Bank of India.

Worth over $7.5 billion at the time of writing, an unnamed government official said the decision was made to reduce storage fees charged to India by the BoE for the storage of the metal. With India part of the BRICS group however, and the increasing move away from US dollars and foreign-held reserves, it is also likely that India wanted closer control over its precious metal reserves.

- The World Gold Council has reported that gold reserve purchases show no signs of stopping. Turkey, China, India and Kazakhstan all saw double-digit increases to their gold holdings in Q1 2024. Combined with India’s repatriation efforts noted above, it is clear that gold reserves continue to play a highly relevant role in the safeguarding of wealth on a national level, particularly while talks of de-dollarisation continue to grow.

- Outside of precious metals, market volatility is also ongoing. Oil prices fell 3% on Monday, dipping to $78 per barrel at one point. This has continued today with both WTI and Brent Crude both down more than 1%. Gas prices however increased to their highest this year following a damaged pipeline in Norway, raising fears of reduced output from Europe’s biggest supplier.

- Stock markets are also seeing volatility with ‘meme stock’ GameStop seeing its share price almost double on Friday only to fall back almost as much on the same day. The rise of AI tech continues to fuel huge growth for companies like Nvidia, whose market capitalisation has surpassed the FTSE 100 and the entire German stock market. There is ongoing speculation as to whether the AI boom is a bubble or the next major advancement of technology, but for companies like Nvidia it has so far resulted in shares increasing over 3,000% in the past five years.

- This week will see a key rate meeting from the ECB, with European rates expected to be cut. Having been late to increase, it will be interesting to see if the ECB are also quicker to cut than the Fed and what effect this will have on the Euro. Friday will also see US non-farm payroll figures released which will give a key picture of the state of the US jobs market and could prompt some further movement in the dollar and precious metals.

Rate cut speculation has returned as the key driver for gold and silver prices at the moment, so anything that puts rates later in 2024 (or into 2025) could see gold and silver drift lower still, but with market volatility rising, and much of the world heading to the polls this year, there is still potential for gold and silver to return to their recent record-breaking rally.