Gold Gains Amid Weaker Economic Data and Rate Hike Optimism


Last week, gold managed to snap its 5-week losing streak while silver jumped by 6.5%. This week was full of scheduled economic releases in inflation data, employment news, consumer confidence, and more.

 Following last week’s Jackson Hole Symposium where Fed officials called for additional rate hikes to fight inflation, investors were eager to see how, or if, this week’s bevy of economic news would affect the Fed’s outlook. Gold started the week at $1,914 and jumped by 0.5% on Monday, as the dollar and bond yields drifted lower. Meanwhile, silver saw little change at $24.27.

 The first round of economic data came from the Labor Department on Tuesday, which revealed that U.S. job openings fell in July to a 2-year low of 8.8 million. On the same day, news broke that U.S. consumer confidence fell to 106.1 in August from 114 in the month prior. For many, the gloomy economic news lessened the odds of Fed rate hikes.

 Following this news, gold rose to a 3-week high of $1,937, while the dollar and Treasury yields slid lower for the second consecutive session. Silver rose by just over 2% on the same day and would end Tuesday’s trading at $24.79.

 More disappointing employment news was released on Wednesday. According to ADP, U.S. private payrolls rose by 177,000 in August against forecasts of 200,000. On the same day, a 2nd quarter GDP revision was released, which showed that the U.S. gross domestic product grew at an annual rate of 2.1%, down from the initial 2.4%.

 The weak economic data bolstered odds that the Fed may pause its rate hiking campaign, which in turn, meant that gold would touch nearly a 1-month high of $1,948. At the same time, silver reached its weekly peak of $24.98. On the same day, stocks in the U.S. rose for the fourth straight session.

 On Thursday, Inflation data via the personal consumption expenditures (PCE) index, was released. The data showed that prices for goods and services rose 0.2% in July, which aligned with expectations. While the price increases were mild, the PCE news further demonstrated that the Fed’s fight against inflation was far from over. Gold saw little change on Thursday, with a closing price of $1,940. Gold would ultimately fall by 0.9% in August, while the dollar index rose for the first month in three.

 Nonfarm payroll data was released this morning, which showed that the U.S. created 187,000 jobs in August, when 180,000 was expected. Additionally, unemployment rose to 3.8% when 3.5% was expected by economists. Stocks in the U.S. were mixed immediately following the jobs news.

 As this is written, the Nasdaq Composite is eyeing the most significant weekly gains of the major averages, at 2.4%. Meanwhile, the Dow Jones Industrial Average and S&P 500 are eyeing 1% and 2% respective weekly gains as rate hike optimism boosted Wall Street sentiment.

 Despite its monthly downturn, gold is eyeing a weekly gain of 1.3% at $1,941 an ounce. Meanwhile, silver is slightly lower at $24.17. Looking ahead, major markets in the U.S. will be closed on Monday, in observance of the Labor Day holiday.

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