Gold and Silver Gain on Softer Dollar and Inflation News

After notching modest gains last week, gold and silver price momentum seemingly hinged on U.S. economic data releases this week and subsequent Fed action. Friday’s surprising uptick in Nonfarm payrolls meant some downward pressure for bullion as, for some, this upped the likelihood of a more hawkish Fed.

Gold and silver started the week at $1,772 and $19.89, respectively. Both metals experienced support from early safe-haven buying on Monday as investors anticipated Wednesday’s CPI data. An eventual move higher to $1,886 for gold and $20.67 for silver was supported by a dollar dip and risk-off Wall Street sentiment.

Disappointing earnings data from tech companies and chipmakers continued to weigh on U.S. equities into Tuesday. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all fell. The tech-heavy Nasdaq fell by the most, at 1.2%. Despite intraday swings, gold and silver saw little change on Tuesday, as the pair ended trading near $1,789 and $20.39, respectively.

Year-over-year consumer prices cooled slightly in July, coming in at 8.5% against estimates of 8.7%. While inflation remains at forty-year highs, some investors took this as a sign that inflation in the U.S. had peaked. Following the inflation news, stocks rallied.

The S&P 500 would end the day 2.2% higher, marking its highest close in nearly three months. Meanwhile, the Nasdaq Composite rose by nearly 3%, while the Dow Jones ended the day 1.5% higher.

Gold also surged higher following the news, touching a one-month high of $1,806. A higher gold price was supported by those who believed that the Fed would be less aggressive with September rate hikes following Wednesday’s inflation news.

Profit-taking would bring gold back down to $1,785 by Thursday, while silver remained near the $20.45 level. The stock market rally also cooled on Thursday as investors digested the inflation news. Data from the Department of Labor revealed a new eight-month high for jobless claims in the U.S. The result was a mixed Wall Street close, and little change in precious metals.

This week’s inflation news was a boost for risker assets, and thus bad news for the dollar. Despite a late-week dollar rally, gold is 1.3% higher for the week at $1,795 an ounce. Silver has also enjoyed support from a softer dollar and is currently near $20.51, which is 3.1% higher for this week.

 Stocks are also eyeing a winning week, as the S&P 500 is currently 1.9% higher. The Nasdaq Composite and Dow are both just over 2% higher as the week draws to a close.