Gold and Silver Surge on Rate Hike Optimism

Last week, gold and silver managed to end their respective weekly losing streaks as hopes that the Fed may pause its current rate hike campaign supported the pair. While there were fewer items on this week’s calendar of economic events, manufacturing and employment news drove investor sentiment on rate hike odds, and subsequently, gold and silver prices.

 Gold started the week at $1,943 but jumped 1% higher as slow U.S. services sector growth boosted odds that the Fed would keep interest rates unchanged at next week’s meeting. By Monday, markets had given more than a 75% chance of a rate hike pause in June. Silver started the week at $23.52 and would see little change until Thursday.

 Gold hovered near $1,964 on Tuesday while major stock market averages such as the Nasdaq Composite and S&P 500 touched fresh 2023 highs. On the same day, news broke that the Securities and Exchange Commission was suing the crypto platform Coinbase, alleging that the company was acting as an unregistered broker. Following the news Bitcoin jumped by over 6%, breaching $27,000.00

 Gold tumbled to its weekly low of $1,939 on Wednesday, as the benchmark 10-year Treasury yield climbed to a one-week high. This move followed news that the Bank of Canada would raise interest rates. For some, this bolstered hawkish bets for the U.S. Federal Reserve policy makers.

 On Thursday, data revealed that last week’s jobless claims surged to 261,000 when 236,000 was expected. For many, this increased the odds that the Fed would indeed pause its rate hike cycle at the June 13-14 policy meeting.

 The employment news also weighed on bond yields and the dollar, which allowed gold to pare losses from the previous session. By Thursday’s close gold was 1.3% higher for the week, at $1,968 an ounce. On the same day, silver closed above $24 for the first time in more than a week.

 Stocks were mixed this morning, but the S&P 500 had managed to enter bull market territory amid news the General Motors and Tesla would collaborate to expand Tesla’s vehicle charging network throughout the U.S.  As this is written, the S&P 500 is eyeing a 0.33% weekly uptick, while Nasdaq and Dow are looking at 0.18% and 0.16% respective weekly gains.

 Currently, gold is near $1,961 despite this morning’s dollar uptick. This would be a 0.9% weekly jump for gold, as Fed rate hike optimism remains supportive of the yellow metal. Silver has followed a similar weekly trajectory, with what will likely be a 3.5% weekly gain, at $24.34 an ounce. Next week’s economic calendar is a full one, where focus will be on inflation data due out Tuesday and a Fed rate hike announcement on Wednesday.

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