Precious Metals Prices

Precious metal prices fell 0.8% in May compared to April, following the large increase recorded in the prior month.

May’s decline was broad-based, with prices for gold, palladium and silver falling. A variety of factors put downward pressure on prices. First, the U.S. dollar strengthened on average in May, making precious metals less affordable to holders of other currencies. Second, U.S. bond yields of varying maturities averaged higher in May than in April, while global interest rates continued to rise last month. This likely made precious metals—which bear no interest—relatively less attractive as an investment. On the flipside, market concerns over U.S. debt ceiling talks and vulnerabilities in U.S. commercial real estate likely spurred safe-haven demand. Moreover, rising car sales in the U.S., Europe and China aided industrial demand for palladium and platinum, while growth in the electric vehicle and solar sectors should have supported silver demand.