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Simon Mugo

Is the recent rally by precious metals goin to last?


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Precious metals have rallied higher recently as the US dollar inched lower given the inverse relationship between such metals and the US dollar, which is regarded as a safe haven currency. The question on most investors’ minds is whether the recent rally will keep going into the foreseeable future, which requires the analysis of the fundamental factors that drive price rallies.

To answer this question adequately, we must look at the main factors that keep a price rally going for a long time, and whether such factors currently exist in the precious metals sector. The main fundamental drivers of price rallies are increasing demand for a commodity accompanied by declining supply of the same commodity.

The demand outlook for most precious metals is quite robust given their massive use in electric cars and the demand is projected to keep growing. Furthermore, the supplies of these rare metals is not increasing fast enough to meet current demand and as such it is highly likely that precious metal prices will keep rising for a long time.

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