Gold and Silver Surge On Recession Worries and a Dollar Decline
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Last week, gold and silver saw gains as recession worries persisted. The pair had plenty of tailwinds throughout this week in a declining dollar, continued recession fears, and rate hike bets. In terms of economic news, investors anticipated consumer and wholesale inflation data, which was due out Wednesday and Thursday, respectively.
Gold slipped below the $2,000 level on Monday, as the dollar index ticked higher and investors digested a U.S. jobs report from the prior Friday, showing 236,000 new jobs in March.
Stocks in the U.S. were mixed on Tuesday, as investors anticipated the release of CPI and PPI data. On the same day, the dollar edged lower which cleared the path for a 1% gold uptick to $2,018. On Wednesday, data showed that consumer prices increased by 0.1% in March, which was the smallest uptick for that index in three months. The core rate of inflation, which does not include food and energy, was up by 0.4% in March.
While inflation still rose in March, gains were largely in line with expectations. For some, this meant that the Fed was more likely to pause its current rate hike campaign. In his speech, Chicago Fed President Goldsbee suggested the central bank should be cautious with future rate hikes, especially considering recent banking sector struggles. Some other Fed officials are still favoring a 0.25% rate at the next policy meeting on May 3rd.
Meeting from the Fed’s March 21-22 meeting were also released on Wednesday. The minutes showed that officials remained concerned about inflation, tighter credit conditions, and a recession later in 2023. Recession worries weighed on Wall Street sentiment throughout Wednesday, as The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all ended the day lower.
Gold and silver momentum persisted through Thursday, as the dollar continued its downward trend, and recession worries intensified. Gold neared a fresh all -time high and would end the day 1.6 % higher, at $2,044. Meanwhile, silver managed to breach $26 for the first time in nearly a year.
This morning, gloomier economic news once again drove U.S. equities lower. Data released this morning showed retails sales slid lower by 1% in March, when a 0.5% decline was forecasted. Meanwhile The University of Michigan consumer sentiment survey showed that Americans remain worried about persistent inflation. Despite this morning’s dip, all three major averages are currently on track for small weekly gains.
Gold pulled back from its recent highs this morning as the dollar bounced. Currently, the yellow metal is near $2.003, which is 0.5% higher for the week. Silver is currently eying a 2.2% weekly uptick, at $24.78 an ounce.
