Gold and Silver Eye Modest Weekly Losses Amid Higher Inflation


Last week, gold and silver fell as the dollar index touched a 5-month high near 105.13. This week, major markets in the U.S. were largely driven by inflation news and Fed rate hike bets.

 Gold started the week at $1,927 and eased slightly on Monday, despite a 0.5% dip in the dollar index. Momentum for the yellow metal was stifled, as the benchmark 10-year Treasury yield edged higher. Ultimately, gold would end Monday slightly lower at $1,922, while silver saw little change at $23.15.

 The dollar rebounded on Tuesday, which pressured gold to a 2-week low of $1,911, while silver dipped below $23. Meanwhile, U.S. equities fell as tech stocks slid. Of the three major averages, the Nasdaq Composite shed the most, at 1.06% as investors anticipated U.S. inflation data on Wednesday.

 On Wednesday, news broke that the consumer price index jumped by 0.6% in August. This marked the biggest gain for that index in 14 months. On the same day it was reported that core inflation rose by 0.3% in August. The so-called core rate of inflation, which excludes food and energy prices, was expected to rise by 0.2%. Despite the higher inflation reading, odds favored no changes to interest rates at the Fed’s September 20th policy meeting.

 While these odds were supportive of precious metals, the dollar rose following the inflation news, which pressured bullion to the downside. Gold fell to a 1-month low of $1,900 after the inflation news, while silver fell by 1% to its weekly low of $22.32. U.S. stocks were mixed on Wednesday, as the Nasdaq Composite and S&P 500 managed modest daily gains.

 Gold bounced slightly from 3-week lows on Thursday, as Fed rate hike optimism provided some momentum for the yellow metal. However, higher yields and a 0.6% jump in the dollar index limited gold’s gains. Gold ended Thursday trading slightly higher at $1,915, while silver saw little change at $22.90.

 Stocks were mixed this morning, following a volatile week of trading and more significant losses in tech shares. As this is written, the Dow Jones Industrial Average is on track for a 0.53% weekly downturn, while the S&P 500 is eying a modest 0.04% weekly gain. The tech-heavy Nasdaq Composite is eyeing the most significant weekly loss at 1.26%.

 Gold enjoyed safe-haven inflows this morning, following news of a worker’s strike from the United Auto Workers Union. Additionally, expectations of a rate hike pause next week along with a 0.4% dollar dip, fueled a 1% bounce for gold.

 This morning’s gains allowed gold to pare most of its weekly losses. Currently gold is hovering near $1,923, which is barely lower for the week. Silver followed a similar weekly trajectory and is eyeing a modest weekly dip at $23.04.

Back to Insights