Gold and Silver Plummet Following NFP News
This week, investors faced a bevy of scheduled economic events with consumer confidence surveys, employment news, manufacturing data, and Nonfarm payroll news, all being released throughout the week. Most of these events were overshadowed by the Tuesday-Wednesday Fed policy meeting, in which a decision on the next rate hike was to be announced.
Stocks in the U.S. slid lower on Monday, as investors exercised caution ahead of the Fed decision. The Nasdaq fell the most on Monday, with a daily loss of 2.1%. Meanwhile, gold and silver saw little change at $1,922 and $23.21, respectively.
Consumer confidence fell last month, according to data released from The Conference Board on Tuesday. According to The Consumer Confidence Survey, consumer confidence fell from 109.5 to 107.1 in January, as consumers remain concerned about inflationary pressures and economic slowdowns. A firmer dollar weighed on precious metals throughout Tuesday, with gold touching an intraday low of $1,900.
Ultimately, gold ended January 4.1% higher, while silver ended the month barely lower around $23.60 an ounce. Despite the slower start to the week, U.S. equites had a positive month with the tech-heavy Nasdaq gaining the most at 11.5%, followed by 6.6% gains for the S&P 500 and a 2.9% increase for the Dow Jones Industrial Average.
On Wednesday, The Institute for Supply Management’s manufacturing survey fell from 48.4% to 47.4% in January, marking the third consecutive decline in the key manufacturing index. Numbers below 50% indicate contraction in the manufacturing sector.
On the same day, Fed Chair Jerome Powell announced a 0.25% interest rate increase, which was in keeping with market expectations. While Powell noted some progress on the inflationary front, he also indicated that there would be more rate hikes to come, as the struggle against rising prices is still in its early stages.
Following the address, the dollar index tumbled to a 9-month low, while gold refreshed 9-month highs near $1,953. Despite the rate hike news and discouraging manufacturing data, stocks in the U.S. also rallied.
Gold retreated on Thursday amid some selling pressure, after previously touching $1,959 an ounce. In a similar move, silver fell by 5.3% on Thursday, and would end the day near $23.48 as the dollar index. bounced from 9-month lows.
Markets were shocked by nonfarm payroll data earlier this morning, which showed a January increase of 517,000 payrolls when 187,000 was expected. Stocks initially waivered following the news, with some investors concerned that the stronger-than-expected employment news may result in a firmer rate hike stance from the Fed.
Gold and silver encountered additional selling pressure immediately following the payroll news, as the pair declined to $1,863 and $22.29, respectively. If maintained, gold will have shed 3.3% this week, while silver is eying a 5.7% loss.