Gold and Silver Eye Second Losing Week Amid Rate Hike Fears
Last week, gold and silver price movements were heavily influenced by Fed policy updates and dollar index movements. On Friday, precious metals plummeted following Nonfarm payroll news that revealed a January payroll increase of 517,000, when forecasts were closer to 190,000. This ultimately led to a 5.4% weekly downturn for silver and a 3.2% weekly loss for gold.
In terms of scheduled events, this week was filled with Fed speaking engagements along with Jobless claims and consumer sentiment news, which were set for release on Thursday and Friday, respectively. On Monday, markets were driven by an uptick in Treasury yields, as the yield on the 2-year Treasury note neared the 4.5% level, resulting in more caution from investors.
Stocks tumbled following the rise in Treasury yields, while gold initially languished near 1-month lows around $1,857. However, gold would recover on safe-haven inflows, ending the day near $1,880. Meanwhile, silver saw little daily change with a closing price of $22.14.
On Tuesday, Fed Chair Jerome Powell addressed an audience at the Economic Club of Washington. In his speech, Powell stated that he expects “significant declines” for U.S. inflation in the upcoming year. The Fed Chair also underscored the need for a continual raising of interest rates, while highlighting the latest round of employment news as supporting evidence for more restrictive monetary policy.
Stocks in the U.S. rallied following Powell’s remarks, with the tech-heavy Nasdaq Composite gaining the most of the three major averages, with nearly a 2% rise. Pressured by dollar index and Treasury yield gains, gold initially dipped following Powell’s address. The yellow metal would eventually pare its losses, ending the day near $1,875, while silver saw modest gains near $22.30.
Gold ticked higher on Wednesday, as the dollar index retreated from 1-month highs near 103.4. At the same time, stocks in the U.S. slid lower following a bevy of disappointing corporate earnings releases. By the end of Wednesday’s trading, gold was slightly higher near $1,878, while silver managed to solidify gains just above $22.30.
Disappointing earnings and a dip in tech shares dragged stocks in the U.S. lower again on Thursday. Most notably, Google’s parent company Alphabet Inc.’s shares drifted lower by nearly 4.5%. Data released from The Department of Labor showed that the number of Americans filing for unemployment unexpectedly increased in January, which contributed to caution among investors.
Gold slid by 0.7% lower on Thursday, as attention shifted to next Tuesday’s inflation data, while silver saw a slight divergence and a daily uptick to $22.50 an ounce. Concerns over future rate hikes and disappointing earnings news drove stocks lower again today, as Wall Street closed in on a losing week. Out of the major averages, the Nasdaq is track to lose the most, with what is currently a 2.1% weekly downturn.
Gold and silver also slid lower this morning, as anticipation of next week’s inflation news and selling pressure drove the pair to $1,862 and $22.01, respectively which if maintained, would mark the second consecutive weekly loss for bullion.