Gold and Silver See a Weekly Divergence Following Positive Payroll News
Last week, gold touched a new all-time high of $2,686 after momentum from recent rate cuts and hope for additional rate cuts boosted the non-yielding metal. This week’s calendar of economic events was marked by Fed speaking engagements and U.S. employment data.
Gold eased on Monday, and at one point fell by more than $50 as overbought conditions pressured the yellow metal lower, to a closing price of $2,628. Elsewhere, the S&P 500 closed at a new record high of 5,762.48 following comments from Fed Chair Jerome Powell. During his remarks, Powell underscored the Fed’s commitment to a healthy U.S. economy but also reiterated that the central bank would not rush to cut rates further.
On Tuesday, markets were shocked by headlines that detailed an Iranian ballistic missile attack on Israel, in which nearly 200 ballistic missiles were fired into the small country. Later, news surfaced that Israeli missile defense systems and U.S. assets in the region successfully shot down most of the incoming missiles.
Fears of a broadening conflict dampened the risk appetite of investors, as U.S. equities suffered their worst day in over a year. Meanwhile, the 10 and 30-year Treasury yields slumped to respective one-week lows while safe-haven inflows supported gold. By the end of Tuesday’s trading, gold was 1% higher at $2,671 an ounce while silver also jumped by 1% to a closing price of $31.60.
On Wednesday, gold dipped on profit-taking and ended the day slightly lower at $2,661 an ounce. Despite Middle East concerns, stocks eked out gains on the same day, but gains were limited for major averages with none gaining more than 0.1%.
Gold was directionally conflicted through Thursday’s trading with downward pressure stemming from dollar strength and support from safe-haven buying. Ultimately the yellow metal would end the day modestly higher, at $2,664 while silver dipped below $32.20. Stocks also slumped on Thursday, as investors looked ahead to Friday’s release of U.S. non-farm payroll data.
This morning, investors took in a stronger-than-expected jobs report which revealed that the U.S. added 254,000 jobs in September, exceeding forecasts of 150,000. Following the employment surprise, bond yields and the dollar rose while stocks notched gains. After today’s uptick, major averages barely managed weekly gains, as the Dow Jones Industrial Average ended the week 0.15% higher. Meanwhile, the S&P 500 and Nasdaq Composite saw 0.44% and 0.39% weekly upticks.
Gold and silver initially tumbled following this morning’s employment news, as stronger employment data dented the odds of more aggressive Fed rate cuts. Despite an afternoon rally, gold ended the week slightly lower, at $2,651, while silver ended the week 1.8% higher at $32.19.