Gold and Stocks Surge Following Upbeat Inflation Data
Last week, gold notched a 2% uptick following upbeat jobs data, as fears of higher interest rates pressured stocks to the downside. This week, markets were largely driven by producer and consumer inflation reports due out on Tuesday and Wednesday, respectively.
U.S. equities started the week on a mixed note, as losses in tech shares such as Nvidia pressured the Nasdaq Composite 0.5% lower, while gains for oil and gas producers boosted other major averages. Elsewhere, gold dipped by 0.6% to a closing price of $2,670 as the dollar index touched a two-year high of 110.114. The dollar index’s move higher was preceded by last week’s robust U.S. employment data, which bolstered expectations of a more cautious Fed in 2025.
On Tuesday, the Labor Department reported that U.S. producer prices rose by 0.1% in December when a 0.3% rise had been forecasted by economists. For some, the encouraging inflation data meant that the Fed would be more likely to continue down its path of monetary easing. This sentiment drove the dollar index lower, while gold ended the day modestly higher, at $2,678. In a similar move, silver notched a modest 0.8% gain during Tuesday’s trading, ending the day at $29.88.
Stocks surged on Wednesday, following another encouraging inflation report from the Bureau of Labor Statistics which revealed that the core inflation rate slowed to 3.2%, beating expectations of 3.3%. Of the three major averages, the Nasdaq posted the most significant daily gain of 2.5%. The softer CPI data boosted dovish Fed bets which, in turn, supported gold’s move higher to $2,696 before Wednesday’s close.
Gold extended its gains on Thursday, on its way to a one-month high of $2,715 after fresh U.S. economic data pressured Treasury yields to the downside. Meanwhile, silver saw little change during Thursday’s trading, at $30.76 an ounce. On Wall Street, the S&P 500 ended its four-session winning streak on Thursday, as investors digested quarterly earnings from tech companies and banks. Most notably, the Nasdaq Composite shed nearly 1% while the Dow and S&P dipped 0.2%.
Gold and silver eased this morning, but both managed weekly gains with support from dovish Fed bets and investor uncertainty. As a result, gold posted a modest 0.6% weekly gain, at $2,702, while silver eked out a 0.3% gain at $30.34.
This morning, the sentiment on Wall Street shifted to upbeat as investors took in big bank earnings and positive inflation data from earlier in the week. As a result, the Nasdaq Composite ended the week 3.83% higher, while the Dow and S&P 500 saw similar respective gains of 3.73% and 3.71%.