Gold Notches its Third Straight Weekly Gain Amid Safe-Haven Inflows
Last week, gold and silver surged higher amid continued conflict in the Middle East. Despite elevated Treasury yields, the pair managed to post 3.2% and 4.5% respective weekly gains. This week, precious metals prices were largely driven by news from Israel, Treasury yield movements, and U.S. economic data.
Gold started the week near a 5-month peak of $1,976 and saw little change on Monday, while the benchmark 10-year Treasury yield briefly managed to breach 5%. Meanwhile, silver fell by 1% to a closing price of $23.01. After a week of steep losses, U.S. stocks managed to snap their losing streaks on Monday, as investors looked ahead to U.S. economic data in home sales, GDP, and PCE data which was set to for release throughout the week.
Gold has managed to rally nearly 9% in the nearly three weeks since Hamas first attacked Israel. However, both gold and silver drifted lower on Tuesday, as safe-haven buying slowed. At one point, gold had fallen by 0.9% but managed to pare losses before the end of trading on Tuesday.
On Wednesday, gold prices firmed on continued safe-haven inflows stemming from conflict in the Middle East. At the same time, Treasury yields and the dollar marched higher, limiting gold’s gains. By the end of trading on Wednesday, gold had risen 0.7% to a closing price of $1,988.
Elevated bond yields also dampened the mood on Wall Street throughout Wednesday. Additionally, mixed earnings from tech companies weighed on major averages, resulting in a 2.5% daily downturn for the Nasdaq Composite and a 1.3% slide for the S&P 500.
On Thursday, third-quarter U.S. GDP data was released, which revealed that the U.S. economy grew at a 4.9% annual pace, when 4.7% was forecasted. Despite the better-than-expected GDP news, U.S. stocks dipped again on Thursday, with some averages slipping into correction territory.
On the same day the European Central Bank announced a pause to its own rate hiking campaign, which consisted of 10 consecutive interest rate increases. Following the news, gold firmed, while silver fell to nearly a 2-week low of $22.53.
Disappointing corporate earnings from companies such as Alphabet, continued to weigh on stocks throughout Friday. Along with mixed earnings, recessionary fears re-surfaced, resulting in downturns for major averages. Ultimately, the S&P 500 and Nasdaq Composite ended the week 2.2% lower, while the Dow Jones Industrial Average slid by 1.6%.
Gold was somewhat conflicted throughout the week, with downward pressure coming from higher Treasury yields and dollar strength, and safe-haven support from geopolitical concerns. Gold’s safe-haven inflows would ultimately win the weak, as gold would notch a 1.5% weekly gain at $2,005 an ounce. Despite this morning’s gains, silver was unable to recover from Thursday’s losses, ending the week slightly lower at $23.09 an ounce.
Next week, investors will monitor U.S. economic data as well as developments in the Middle East. Of key importance will be the U.S. Federal Reserve’s interest rate decision on interest rates, which is scheduled for Wednesday.