Gold Sees a Weekly Decline as Stocks Rally
Last week, gold gained nearly 2% and U.S. equities tumbled, amid weaker-than-expected U.S. economic data. This week’s calendar of scheduled economic events was light, while major markets were driven by investor concern over a potential recession in the U.S.
Following last week’s disappointing employment news, investor concern over U.S. economic health spurred a selloff on Wall Street. As a result, global equities plummeted, while the Dow Jones Industrial Average shed 1,000 points. Precious metals were also caught up in the broad selloff, as gold ended Monday’s trading 1.8% lower. At the same time, silver dipped by almost 4% to a closing price of $27.38.
On Tuesday, the Dow snapped its three-day losing streak while other major averages rallied, as a Japanese stock market rebound boosted investor sentiment. On the same day, gold eased as the dollar index rose by 0.2% against a basket of other currencies. Gold ended Tuesday’s trading near $2,394, as losses for bullion were limited by Middle East upheaval and interest rate optimism.
The U.S. stock market rally fizzled on Wednesday, as a slump in stocks from tech companies like Meta, Nvidia, and Tesla pressured major averages to the downside. Elsewhere, gold and silver saw little change with respective closing prices of $2,396 and $26.82.
On Thursday, investors were greeted with encouraging employment news, as jobless claims sunk from a one-year high to 233,000. Economists had predicted a rise to 240,000 weekly jobless claims. As investor concern over a recession was, to some degree, assuaged, stocks jumped on Thursday. Most notably, the S&P 500 recorded its best day since November of 2022.
Gold also pared some of its weekly losses on Thursday, as Middle East concern led to safe-haven inflows. Additionally, the yellow metal benefited from monetary policy optimism, as markets saw a 100% chance of a September rate cut, according to the CME FedWatch tool. By the end of trading on Thursday gold notched a 1% gain, on its way to $2,425 an ounce. Silver also rallied on Thursday, notching more than a 3% gain at a closing price of $27.68.
Gold firmed this morning, as rate cut odds and geopolitical concerns supported bullion. Additionally, gold and silver were aided by a decline in bond yields and the dollar index, following yesterday’s better-than-expected jobless claims print. Despite three consecutive daily upticks, gold remains poised for a 0.9% weekly downturn, at $2,430 an ounce. Silver also managed to pare some of its losses that were suffered earlier in the week but is currently eyeing a 3.5% weekly loss at $27.47.
Remarkably, U.S. stocks managed to end the week in the green, as investors bought the dip and employment optimism alleviated concern over the U.S. economy. As this is written, the Nasdaq Composite is 6.4% higher for the week, while the S&P 500 and Dow are closing in on 3.6% and 1.2% weekly gains.