Gold and Silver Oscillate Between Gains and Losses on Mixed Economic News
Last week saw increased volatility for gold amid a highly anticipated Federal Reserve decision to raise interest rates in the U.S. by 50-basis points, which was a break from the previous four rate hikes of 75-basis points. Concerns over the effects of higher interest rates on an already-weakened U.S. economy drove caution on Wall Street and a dip in U.S. equities last week. This week, investors closely eyed GDP data, jobless news, and inflation data ahead of the long Christmas weekend.
On Monday gold inched lower, despite a slight dollar dip. The yellow metal ended the day lower, near $1,785 while silver was modestly lower at a closing price of $22.94. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite also slid lower on the same day, as recession fears mounted. This marked four consecutive days of losses for all three major indices.
The Bank of Japan (BOJ) stunned markets on Tuesday, with a decision to raise the 10-year Japanese bond yield cap from 0.25% to 0.5%. Globally, bond yields spiked following the announcement, while stocks in the U.S. managed to end their four-day losing streak. Gold and silver also rallied following the BOJ decision on Tuesday. While gold would reclaim a one-week high near $1,824, silver settled over 5% higher to a closing price of $24.14.
The mood was once again upbeat on Wall Street Wednesday, following better-than-expected retail earnings news and a surprise surge in consumer confidence.
Following the news, the Dow gained over 500 points, while the S&P 500 and Nasdaq Composite secured gains close to 1.5%. Meanwhile, gold and silver prices saw little change on Wednesday, near $1,816 and $23.98, respectively.
Thursday’s jobless data showed that applications for unemployment benefits in the U.S. rose from the previous week, but the number of applicants was still lower than the expected 220,000. GDP data was also released on Thursday, which showed a surprising 3.2% annual increase, despite higher interest rates and rampant inflation.
Despite the positive employment and GDP data, investors remained concerned over the prospect of higher interest rates pushing the U.S. economy into a deeper recession. This mood caused a resumption in the Wall Street sell-off, which drove the S&P 500 nearly 3% lower before the end of trading. Meanwhile, the positive GDP news boosted the dollar index which pressured gold and silver to the downside. Dollar gains on Thursday pushed gold 1.3% lower, to $1,792, while silver was slightly lower at $23.56 an ounce.
The core personal consumption expenditures price index, which excludes food and energy prices, came in slightly higher than expected on Friday, at 4.7% on a year-on-year basis, when 4.6% was forecasted. This news drove stocks lower once again, as the S&P 500 and Nasdaq are facing monthly losses around 6% and 9%, respectively.
As this is written, gold is holding support near $1,800, which is slightly higher for the week. Currently, silver is 2.6% higher for the week, at $23.76 an ounce. Looking ahead, major markets in the U.S. will be closed on Monday the 26th, in observation of the Christmas holiday.