Gold, silver, and platinum are going crazy

Silver Surfer

Commodity prices and mining stocks are going wild on Thursday morning after the US Federal Reserve struck a dovish tone at its March meeting on Wednesday evening.

The United States’ central bank left its benchmark interest rate unchanged in the range between 0.25 and 0.5%, and cut the number of rate hikes it expects to undertake in 2016 from four to two.

That move sent the dollar sharply downwards, which in turn has given the price of raw materials across the globe a big boost. That rally has also helped to spark a big jump in mining stocks in early European trading.

Virtually every single commodity is trading in positive territory this morning, with precious metals and oil leading the way. Amongst the biggest winners, are precious metals.

Gold’s huge rally in 2016, which has seen it gain 18% in value since January, has continued, despite increased stability in financial markets in the past few weeks. Today it has gained more than 3%, and is trading at $1,267.4 per ounce. Gold initially rallied at the start of the year thanks to crazy volatility in the markets, which sent investors flooding to the “safe haven” metal, but has kept going upwards even since things quietened down. Here’s how gold’s surge today looks:


Today’s jump in the gold price has also helped drag the price of silver, and PGMs — platinum group metals — higher. Just after 9:00 a.m. GMT (5:00 a.m ET) silver has gained 3.2%, while platinum is up by 3.1%. HSBC’s daily note on precious metals argues that the rally isn’t likely to be short lived. Here’s the bank (emphasis ours):

The PGMs and silver are often influenced by gold and their respective rallies today are largely a function of higher gold prices. But we also believe silver and the PGMs have compelling underlying fundamentals that argue for higher prices. Silver has not kept up with gold and may benefit from greater coin and bar demand, as buyers could shift from gold products. Platinum and palladium are running production/consumption deficits and auto demand, the main demand source for both metals, is still buoyant. This leaves us comfortable with their respective rallies.

Oil is also having a bumper day, with both major benchmarks seeing big gains early this morning. Brent crude, the European benchmark has popped by 2.7% to $41.42, while West Texas Intermediate has gained more than 3%, and is now approaching the $40 per barrel mark. This morning it is trading at $39.61.

The commodity rally on Thursday morning has given a huge boost to commodity stocks trading in Europe, and particularly those on the FTSE 100. An hour into trading, all of the FTSE’s biggest winners are resources based firms, with Anglo American topping the pile, gaining 10%. Anglo shares are now up more than 140% since hitting an all-time low in January. Randgold Resources, the biggest gold miner listed on the FTSE, has popped 5.5%. Here’s the scoreboard:

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