Global trading director Peter Hug believes appetite for both metals will soon be renewed.
Peter Hug, global trading director at Kitco Metals, recently spoke to Kitco News about his outlook for gold and silver over the course of the summer. Although neither metal has seen a lot of price action over the past few months, Hug believes this could soon change as investor appetite becomes renewed during a time of diminished supply.
The U.S. Mint experienced several shortages of Silver Eagle coins throughout the past year, and Hug sees this as a recurring trend, especially if prices move slightly lower. According to the Kitco article, should this happen, Hug thinks that both the U.S. and Canadian mints will find their stock depleted once again.
Kitco states that situations like these invariably lead to a spike in price premiums among retailers, and the director thinks both gold and silver will bounce considerably as investors scramble to load up on bullion with a buy-low strategy. Hug pointed to the $1,200 level for gold and $14 level for silver as strong support lines that, if reached, would trigger a considerable buying spree. Although both metals are quite a ways off from those levels, a supply glut could happen even at higher prices, as June and July are traditionally the weakest production months for the refineries.
Regarding gold’s current state, Hug noted that the yellow metal is experiencing an unusual amount of volatility due to the amount of factors influencing the market, making it a difficult trading option. However, the director drew a clear line between American gold investment compared to that in Europe and Asia, stating that the latter markets are seeing far greater interest.
Besides volatility, Hug attributes tempered domestic gold demand to the U.S. dollar’s resilience, even amid numerous hints that the greenback is slated to fall off in the near future. In contrast, Europe has seen plenty of reinvigorated physical demand, as gold prices have been rising in other currencies.
The robust physical demand among European investors is likely related to various flare-ups in the eurozone, potentially spearheaded by escalating complications surrounding Britain’s exit from the European Union, reports Kitco. The most recent development saw British Prime Minister Theresa May announce her impending resignation due to growing public dissent, driving yet another wedge in an already-confounding Brexit situation.
The same is true of other markets, said Hug, as Canadian investors have shown a far greater proclivity towards bullion because of the Canadian dollar’s relative weakness compared to the greenback. Hug added that the Hong Kong gold market has also been doing very well, tying into forecasts that Asian gold demand could pick up this year.