August 30th Market Update


Gold & Silver Gain on Fed Speech, All Eyes on Employment Data

Boosted by the Fed’s dovish tone on Friday, both gold and silver ended the week on a high note. Since Friday’s close, gold is little changed. The yellow metal is currently near $1,813 an ounce. Silver is up by 0.6% and is at $24.06. 

 Bitcoin detractors have been more vocal in recent days, as prices in the crypto space have slid. Bitcoin is currently at $47,777, down 2% from Sunday highs. Notable billionaire and hedge fund Manager, John Paulson recently stated that “cryptocurrencies are a bubble” and “a limited supply of nothing.” Paulson may be most known for betting against the housing market in 2006, earning over $20 billion for his clients after the 2008 financial crisis. Officials from the People’s Bank of China have also announced additional crackdowns on cryptocurrencies. 

Hurricane Ida made landfall in Louisiana on Sunday. The violent Category 4 storm is more powerful than Hurricane Katrina and has already left hundreds of thousands without power. Despite this, rising COVID cases, and continued chaos in Afghanistan, U.S. stocks are opening slightly higher.

 The S&P 500 and Nasdaq Composite have both reached new highs, while the Dow dipped modestly, by 0.1%. Investors are digesting Fed Chair Jerome Powell’s speech from Friday, which seemed to indicate QE tapering could occur in 2021. However, substantial progress in terms of jobs and growth would need to be seen first. 

 Investors are weighing the Fed’s dovish comments, but are also mindful of several other voting members who are taking a more hawkish tone. Given that job growth has been a barometer for the taper timeline, positive employment data could spur more voting members to begin tapering sooner than what Powell had indicated on Friday. 

 Jobs being a key metric, investors will be looking closely at Friday’s release of Nonfarm payrolls and unemployment rates. The unemployment rate is forecasted to have decreased to 5.2% from the previous 5.4%. 

 Other than Friday’s employment data, this week is lacking in terms of scheduled economic events. The Consumer Confidence Index is scheduled for release tomorrow at 10:00 AM (ET). Gold and silver bugs will also monitor dollar movements throughout this week. 

 The U.S. dollar Index (DXY) was under mounting pressure after the Fed speech on Friday. Currently, the dollar is down by 0.5%. A strong reading from Friday’s Nonfarm payrolls could be supportive of the dollar but may also be a detractor for bullion prices. 

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