Gold Falls from Record Highs Amid Elevated Yields and Dollar Strength
Last week, gold notched a 0.5% gain as inflation worries and geopolitical uncertainty spurred safe-haven inflows into precious metals. This week, markets were driven by earnings from major U.S. tech companies and economic data.
On Monday, the Dow Jones Industrial Average snapped a five-day losing streak ahead of a deluge of tech earnings, while other major averages secured modest daily upticks. Gold started the week at $2,735 and would edge lower Monday morning amid elevated Treasury yields.
Momentum continued on Wall Street throughout Tuesday’s trading, as the Nasdaq edged up 0.8% to a record close of 18,717.58. Meanwhile, gold and silver pared losses from the previous session as investors assessed the interest rate outlook, while U.S. election jitters bolstered safe-haven demand for bullion.
On Tuesday, data from the CME FedWatch Tool indicated a 96% chance of a 0.25% rate cut at the Fed’s November 11th meeting. As a result, gold closed 0.8% higher on Tuesday at $2,778, while silver remained nearly unchanged, at $34.23.
On Wednesday, U.S. equities tumbled as mixed earnings from tech companies like Google and Meta dragged major averages into the red. Despite elevated Treasury yields, gold reached a fresh all-time high of $2,784 during Wednesday's trading. At that point, gold was up by 34% since the beginning of 2024. Gold’s move upward was aided by uncertainty over the U.S. election and conflict in the Middle East.
Wall Street’s tech-led selloff continued on Thursday, as the Dow and S&P 500 notched their first monthly loss in five months. Added pressure came via higher yields, as the 2-year Treasury yield saw its biggest monthly rise since February of 2023.
Gold also tumbled on Thursday, as stronger employment data from the U.S. and Europe dented the rate cut outlook. Following Thursday’s employment news, gold shed 2% and would end the day at $2,749, while silver dipped to a two-week low of $32.56.
Bullion encountered more pressure this morning, as Treasury yields and the dollar index continued to climb higher. However, Gold’s losses were limited by a dismal U.S. employment report which revealed that the U.S. only added 12,000 jobs in October, when economists called for a significantly higher number of 112,000. This brought the number of U.S. job openings to their lowest level since December of 2020.
The weaker-than-expected employment data supported bets of a dovish Fed tilt in the coming weeks. Still, gold ended the week about where it started, at $2,734 an ounce, while silver saw a 3% weekly decline, at $32.40.
U.S. equities shrugged off this morning’s week employment data, as stocks staged a rally. Most notably, the Nasdaq Composite advanced by 0.8% as earnings from Amazon and Intel exceeded Wall Street’s expectations. Despite today’s gains, the three major averages ended the week lower, with the Dow shedding 0.5%. Meanwhile, the S&P 500 and Nasdaq notched 1.8% and 2.2% respective weekly losses.