Gold encounters a steep sell-off while stocks post weekly gains
Last week, gold secured its sixth consecutive weekly gain as trade war concerns drove demand for safe-haven assets. This week, investors closely monitored developments on the tariff front, along with testimony from Fed Chair Jerome Powell and U.S. consumer inflation data.
On Monday, U.S. equities rallied despite headlines suggesting President Trump was considering 25% tariffs on steel and aluminum imports. Notably, the Dow Jones Industrial Average rose 0.4% after experiencing its steepest weekly decline in four weeks. Gold began Monday’s session at $2,890 and briefly touched a fresh all-time high of $2,939 as trade war concerns fueled safe-haven buying.
On Tuesday, Fed Chair Powell appeared before the Senate Banking Committee, urging caution and signaling that the central bank would not rush additional rate cuts. Stocks ended the day mixed, while gold fell more than 1% amid profit-taking.
Wednesday’s focus shifted to the U.S. Bureau of Labor Statistics’ January consumer inflation (CPI) report, which showed year-over-year CPI rising 3% for the first time in seven months. The report also revealed a month-over-month inflation increase of 0.5%, surpassing forecasts of 0.3%.
The hotter-than-expected inflation reading reinforced a hawkish Fed outlook, leading to another mixed session on Wall Street. However, despite decreasing odds of near-term rate cuts, precious metals remained supported by concerns over trade volatility. Gold held steady near $2,910, while silver saw little change at $31.78.
Thursday’s headlines were dominated by President Trump’s announcement of "fair and reciprocal" tariffs for all U.S. trading partners. However, investors remained optimistic as implementation was delayed by at least a month, allowing time for negotiations between the U.S. and its trading partners.
Following news of the delay, Wall Street sentiment turned positive. The tech-heavy Nasdaq led Thursday’s gains, rising 1.5%, largely driven by surging Nvidia and Tesla shares. Elsewhere, gold climbed 0.5%, closing at $2,933, as investors continued flocking to safe-haven assets.
Friday, markets reacted to a larger-than-expected decline in January retail sales, which fell 0.9%, well below the forecasted 0.2% drop. However, equities remained largely unchanged as investors processed a week filled with inflation updates and global trade developments. Strength in the tech sector helped the Nasdaq notch a 1.81% weekly gain, while the S&P 500 and Dow posted respective gains of 1.12% and 0.28%.
Gold had already faced some selling pressure before the retail sales report. However, the decline accelerated, leaving gold 1.7% lower on the day and flat for the week at $2,880. Silver followed suit, falling nearly 2% on the day but still ending the week modestly higher at $32.26 an ounce.