August 2nd Market Update

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Gold & Silver Prices Decline, Jobs Data in Focus

As we begin the week, gold and silver prices are down slightly from Friday’s levels, despite a dollar decline and lower Treasury yields. Currently, silver is hovering near $25.41 while gold is closer to $1,814 an ounce. Investor sentiment on Wall Street is mixed, but largely optimistic as positive earnings have out-weighed concerns over increasing coronavirus cases.

 

The Nasdaq, Dow Jones Industrial Average, and S&P 500 have all inched higher this morning while the U.S. Senate works on a $1 trillion infrastructure deal. Higher earnings signal that central bank stimulus may continue, have fueled equites, leading to a sixth straight monthly gain for the S&P 500.

 

Last week, the Fed announced that interest rates would remain unchanged, near zero. Fed officials also stated that the U.S. Economy is headed in the right direction, despite coronavirus concerns. Given this, investors are looking to this week’s release of Nonfarm payroll (NFP) data, to gauge growth in terms of jobs.

 

This data is set to be released Friday morning. Fed Chair Jerome Powell indicated that the U.S. job market has a longer road ahead. However, some are expecting a stronger jobs report, which could bring taper-talks to the forefront once again. In the past, Fed tapering has resulted in a pullback in the stock market.

 

Friday’s NFP release is the key scheduled event for this week. ISM manufacturing data was released today, revealing a decline or a slowing in growth for the U.S. manufacturing sector. The ISM services index is scheduled for release on Wednesday. A slight increase is forecasted there. However, labor shortages could continue to weigh on service sector growth.

 

Central banks in Australia and the United Kingdom are also announcing decisions on monetary policy this week. The Australian Central Bank is expected to reverse course on its decision to taper bond purchasing, amid more lockdowns. There is some pressure for the Bank of England to begin tapering, amid rising inflation.

 

Currently, the dollar is hovering near one-month lows around 91.8. Given the historic relationship between metals and the dollar, gold and silver bugs will be watching the dollar closely. A more positive jobs report on Friday could potentially bolster the greenback, which could also affect gold and silver prices.


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