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Gold prices concluded their third consecutive quarterly gain on Friday after a closely followed U.S. inflation measure, favored by the Federal Reserve, was in line with expectations. This outcome maintained optimism that the central bank might opt to reduce interest rates by September.
The U.S. Department of Commerce reported that its core Personal Consumption Expenditures Price Index, which excludes volatile food and energy costs, increased by 0.1% in May, compared to the revised 0.3% growth in April. Additionally, core PCE rose by 2.6% in the last year, down from April’s 2.8%.
“We are observing a gradual decline in inflation trends,” said David Meger of High Ridge Futures to Reuters. “This has led to lower yields, higher bond prices, and has provided some support for the gold market.”
Gold and Silver Performance
At the end of the quarter, the front-month Comex gold (XAUUSD:CUR) for July delivery closed at $2,327.70/oz, marking a gain of +4.9% for the quarter. However, the price was only 0.2% higher for June and 0.1% on Friday.
Similarly, the front-month Comex July silver (XAGUSD:CUR) concluded the quarter at $29.237/oz, showing an increase of +17.9% for the quarter but a decrease of 3.5% in June. On Friday, silver saw a gain of 1.1%.
Both gold and silver reached year-to-date settlement peaks on May 20 at $2,433.90/oz and $32.205/oz, respectively. Year-to-date, gold is up by 12.8% and silver by 22.5%.
Insights on Mining Stocks
John Hathaway, Senior Portfolio Manager of Sprott Asset Management, suggested that achieving $3,000 gold within the next year is plausible in the current economic and geopolitical climate. He emphasized that such a development would have significant implications for mining stocks.
Hathaway noted that mining stocks are underperforming in a market dominated by a few tech giants. He believes that if the current crowded trade scenario unwinds, investors may turn to opportunities in precious metals mining stocks.
“There’s a significant mean reversion opportunity ahead, assuming gold prices remain at their current levels,” Hathaway stated. He further argued that if investors start to feel uneasy with their existing positions, there could be potential for further growth in gold prices. This outlook could trigger a substantial move in mining stocks, even if gold prices stabilize.
