Gold Sees Weekly Gains After Retreating From Record Highs
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Last week, gold snapped its three-week winning streak, as hotter inflation readings cast doubt on whether the Federal Reserve would move forward with interest rate cuts in the near term. This week’s calendar of scheduled economic events was light, with the focus being on Wednesday’s FOMC interest rate announcement.
Gold started the week at $2,147, and silver at $25.03. The pair saw modest gains on Monday, amid growing sentiment that the Fed may still cut interest rates in June, despite inflation woes. Stocks rose on the same day, given optimism surrounding monetary policy. Wall Street sentiment was also boosted by housing data from the NAHB, which revealed that builder confidence rose for the fourth consecutive month, to its highest level since July of last year.
Gold traded in a tight range near $2,158 on Tuesday, ahead of Wednesday's much-anticipated Fed update. Stocks rose on the same day following news that Japan’s central bank raised interest rates for the first time in sixteen years. Most notably, the S&P 500 closed at a new record high of 5,178.51.
At the end of the Fed’s two-day meeting on Wednesday, Jerome Powell delivered the much-expected news that rates would remain unchanged in March. Investors were more interested in whether the central bank would be deterred from cutting rates in June, given higher inflation data from January and February.
Regarding inflation, Powell stated that the path towards the target inflation rate of 2% was expected to be “bumpy” and that policy makers are looking for further confirmation of last-year’s lower inflation numbers. In reference to the recent higher-than-expected inflation data, Powell stated that, “We’re not going to overreact to these two months of data, nor are we going to ignore them.” The Fed Chair also reiterated that interest rates are likely at a peak for this type of cycle, while the Fed’s dot plot stuck maintained three interest rate cuts throughout 2024.
Following Powell’s press conference, the Dow Jones, Nasdaq, and S&P 500, all closed at record highs for the first time since November of 2021. Gold also jumped following the Fed update and would end Wednesday’s trading 2% higher at $2,203 an ounce.
Gold continued its momentum into Thursday morning and would reach a new all-time high of $2,211. However, the gold rally would not last, as this morning, dollar strength pressured the yellow metal to the downside. Currently, gold is still poised for a 0.8% weekly uptick, at $2,165. Silver also suffered from dollar strength, and is eyeing a modest weekly downturn, at $24.69.
Stocks took a breather today, but major averages are still closing in on healthy weekly gains. At the time of writing, the Dow Jones Industrial Average is 1.67% higher for the week, which if maintained, would mark its best week of 2024. Meanwhile, the Nasdaq Composite and S&P 500 are eyeing 1.71% and 1.54% respective weekly gains.
