Gold and Silver End Their Winning Streak on Rate Hike Bets, Dollar Gains

This week, Investors were largely focused on economic data, and Fed speak, while Wall Street momentum was also driven by retail earnings. Specifically, housing data released throughout the week, Wednesday’s Fed meeting minutes, and Thursday’s jobless claims were of particular interest.

Precious metals were able to secure modest gains last week, in part due to a weaker dollar. The opposite was true as this week began, as Monday saw a firmer dollar and subsequent pressure on gold prices. Gold fell by 0.6% on Monday, ending the day near the $1,781 mark. At the same time, silver fell by nearly 2%, ending the day near $20.19 an ounce. 

On Tuesday, the Down Jones Industrial Average and S&P 500 secured their fifth straight days of gains. Stock market momentum was driven by gains for major retail shares such as Target and Lowe’s. On the same day, Reddit traders once again pushed shares of Bath and Body Works higher, as the stock ended the day nearly 30% higher. 

Gold and silver were mostly flat on Tuesday, as the pair hovered around $1,780 and $20.20, respectively. Meanwhile, The Commerce Department reported that construction of new homes in the U.S. fell to their lowest since February of 2021. 

The highly anticipated minutes from July’s Fed meeting were released on Wednesday. The minutes outlined the central bank’s commitment to raising rates in efforts to combat inflation. They also acknowledged that a continual raising of rates would likely have an adverse effect on economic growth. 

U.S. equities were more volatile following the news but saw little overall change. The prospect of higher interest rates coupled with a dollar uptick, drove gold down to a closing price of $1,762, while silver fell a further 2.6% on its way to a $19.68 close.

Investors were hit with a bevy of economic data on Thursday. Most notably, weekly jobless claims saw an unexpected dip, while continuing claims reached a four-month high. On the same day, housing market concerns re-surfaced, as data revealed that existing home sales fell by 5.9%. This marked the sixth straight month of slowdowns in that sector.  

Despite the gloomier economic news, stocks inched higher on Thursday, while the dollar touched one-month highs. Gold saw little change on Thursday, while silver fell to $19.39 an ounce. 

As of today, the dollar index remains near one-month highs, supported by the prospect of higher interest rates and safe haven flows. Meanwhile, gold touched a three-week low near $1,745. If maintained, this would end gold’s three-week winning streak, with a 2.7% weekly dip. 

As this is written, silver is fighting to stay above the $19 mark, which is 7.5% lower for the week. While metals seem to be in consolidation mode, investor hopes of a rate hike slowdown were dampened this week, which also ended the winning streak for U.S. equities. Currently, the S&P 500 is down by 1.3% on the week, while the Nasdaq is 2.2% lower.