Precious Metals ETFs: Silver Shines while Gold Fluctuates around its Historical Highs
Silver ETFs outperform as demand for the white metal surges, while gold holds around its highs amid signs of weakening job market and low inflation leading the Fed to cut interest rates in September.
Precious metals continued to rally with gold's spot price edging up 0.18% for the week and silver's spot price gaining 2.89%.
Gold closed the week above $2,500 per ounce, nearing record highs repeatedly breached this week. Enhanced demand for non-yielding bullion followed signals of a dovish Federal Reserve during the Jackson Hole Economic Symposium. Fed Chairman Jerome Powell indicated readiness to lower interest rates in September, citing easing inflation and concerns over further job market weakening. Silver also gained traction in the wake of Powell's speech, ending the week close to $30 per ounce.
Let's explore how these developments have impacted precious metals ETFs.
Gold's 4-Week Winning Streak
Gold firmed up around $2,512 per ounce on Friday after a significant dip of over 1% the previous day. Investors were cautiously optimistic ahead of Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium. He stated that "the time has come for monetary policy to adjust" but noted that the timing and pace of rate cuts will be determined by incoming data, the evolving economic outlook, and the balance of risks. Traders are now betting on a 100 basis points cut by the end of the year.
This potential easing could make gold more attractive by reducing the opportunity cost of holding non-yielding assets.
Silver's Bright Outlook Driven by Demand
Similarly, silver jumped after Powell signalled the beginning of the easing cycle. The white metal also benefits from its critical role in the energy transition, particularly in the production of solar panels. Despite a brief pullback, where prices fell over 2% to below $29 per ounce on Thursday, silver strongly rebounded on Friday, attracting significant investor interest. The white metal's supply-demand imbalance continues to make it an appealing bet for those looking to capitalize on its industrial uses.
Silver ETFs have outperformed their gold counterparts recently, reflecting this optimism. While gold-focused ETFs were treading water, silver ETFs gained traction, with the iShares Silver Bullion ETF (SVR) and the Purpose Silver Bullion Trust ETF (SBT.B) posting notable gains over the week.
ETF Performance: Silver Outshines Gold
The recent market movements have clearly impacted ETF performance. Precious metal ETFs registered only a modest gain for the week, largely due to small increases in gold. However, silver-focused ETFs were a standout, with an average gain of 3.30%. The iShares Silver Bullion ETF (SVR) rose by 4.50%, while the Purpose Silver Bullion Trust ETF (SBT.B) wasn't far behind, earning 4.73%.
Here's a comparison between Silver ETFs.
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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
