The stock market returned on Thursday in its mixed ways, showing the continued efforts of investors to try to identify certain segments of the economy that are likely to do better than others. Unemployment advertising fell below the 1 million mark this past week, marking another milestone for hopefully being able to return to more normal economic conditions. Just before 11 a.m. EDT, de Dow Jones industrial average (DJINDICES: ^ DJI) was 67 points down to 27,910. However, the S&P 500 (SNPINDEX: ^ SPX) rose 2 points to 3,382, and the Nasdaq Composite (NASDAQINDEX: ^ COMP) climbed 88 points to 11,100.
The precious metals markets are particularly tumultuous this week, with gold prices in particular rising to record levels before falling back dramatically. On Thursday morning, gold and silver posted solid rebounds. The movements have made some investors envious of whether trends in the economy are a rise in the long term for precious metals and the stocks that could benefit if prices could push up.
Shines brighter
Precious metal markets opened higher Thursday morning, continuing to plummet from decline earlier in the week. Gold prices jumped $ 28 per ounce to $ 1,942 shortly before 11 a.m. EDT, while silver prices were up $ 1.15 per ounce to $ 26.60. Platinum group metals also followed gold and silver higher, as platinum rose $ 27 per ounce to $ 948 and palladium rose $ 35 per ounce to $ 2,043.
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The movements of the day marked a welcome but small recovery from the sharp decline seen two days ago. Tuesday brought a price of $ 118-per-ounce into the price of gold, and silver was more than $ 4 per ounce down. These were historic drops in percentage terms, and they came after gold had hit record levels and silver had risen to its highest price in years.
In response, stocks related to the gold and gold mining industry rose. ETFs SPDR Gold (NYSEMKT: GLD) en iShares Silver (NEW: SLV) saw percentage gains of 2% and 6%, respectively, in line with the rise in bullion prices. De VanEck Vectors Gold Miners ETF (NEW: GDX) was higher by about 4%, with major mining stocks as well Newmont (NYSE: EASY) en Barrick Gold (NYSE: GOLD) profit show of 2% and 3% respectively. Precious metal streaming specialist Wheaton Precious Metals (NYSE: WPM) waited with a 4% advance.
What’s next for gold and silver?
The rise in interest in gold and silver has come from various angles. Many are skeptical about the US government’s recent efforts to stimulate economic growth through massive spending, citing potential effects such as inflation as likely. The consumer price index rose 0.7% in June and 0.6% in July, providing some evidence of rising inflation concerns.
Meanwhile, interest rates remain at rock-bottom levels. This is largely due to intervention by the Federal Reserve and other central banks around the world, but the low-cost environment makes it much easier for commodity investors to finance their positions and make speculative bets on precious metals. The result has been greater volatility than normal, but the general trend has generally pointed upwards.
Bullish gold investors believe the sharp decline on Tuesday was just a correction after an impressive climb in recent weeks. They believe gold could easily move above $ 2,000 and set new record highs, with some ambitious investors looking to price targets such as $ 2,500 and $ 3,000 in the near future.
Ultimately, a lot will depend on what happens to the stock market and to future incentive packages. When the economy recovers, gold and silver may fall back. However, if a new wave of stock market declines occurs, precious metals may re-emerge on the resulting uncertainty in financial markets.
