Gold prices are higher on Thursday morning. The September U.S. consumer price index rose 0.2% month-on-month and 2.4% year-on-year, with core CPI up 0.3% month-on-month and 3.3% year-on-year, slightly exceeding expectations. Despite the warmer CPI report, higher-than-expected weekly U.S. jobless claims have resulted in today’s data being considered favorable for metals markets and unlikely to alter the Federal Reserve’s trajectory towards an easier monetary policy by year-end. The price of gold is trading at $2625.12, up $17.35. The price of silver is trading at $30.95, up 45 cents.
Tavi Costa, of Crescat Capital, highlights a striking phenomenon in the silver market. Despite silver prices reaching near 13-year highs, production from the world’s two largest silver producers has remained virtually unchanged. This stagnation in output is indicative of significant constraints on new supply in the silver industry.
Costa suggests that this trend of limited supply growth is likely to persist due to insufficient capital investment in new mine development. Furthermore, they emphasize a crucial point: silver production currently stands at the same level it did in 2010, underscoring the long-term nature of this supply constraint. This situation implies potential future price pressures in the silver market as demand potentially outpaces the ability to increase supply.
Read the full article here