Gold Sees a Weekly Loss Amid Surging Yields and Fed Ambiguity
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Last week, gold managed to pare weekly losses spurred on by better-than-expected employment data, while silver saw a modest weekly decline. This week’s schedule of economic events was dominated by Fed speaking engagements and employment news. Throughout this week, precious metals prices were largely driven by monetary policy bets, dollar index movements, and Treasury yields. Gold and silver started the week at $2,030 and $22.56, respectively. On Monday, gold encountered continued pressure from Friday’s positive employment news and hawkish Fed speak. As a result, gold fell to a 2-week low of $2,014 as the dollar and Treasury yields surged higher. Gold jumped to $2,037 on Tuesday, as the dollar rally paused. On the same day, concerns surfaced over the health of the U.S. commercial real estate market, while shares of New York Community Bank tumbled by over 21%. Despite this, major Wall Street Averages managed daily gains. On Wednesday, the dollar eased from 3-month highs, which lent gold some short-term momentum. This, and news that Moody’s Investor Service downgraded New York Community Bancorp to its lowest possible investment grade rating, paved the way for gold to reach its weekly peak of $2,043 an ounce. Despite fears over the commercial banking sector, U.S. stocks steadied near record highs on Thursday. The mood on Wall Street was lifted by strong quarterly earnings news from companies like Disney, along with a lower-than-expected weekly jobless claims print of 218,000. The positive jobless news provided momentum for the dollar, which pressured gold to the downside on Thursday. Additionally, gold encountered headwinds from uncertainty regarding interest rate cuts. Despite the week being filled with Fed speaking events, no officials from the central bank committed to a firm timeline for rate cuts in 2024. Gold declined another 0.6% this morning, as elevated Treasury yields continued to weigh on the yellow metal. As this is written, the 10-year Treasury note is near a 2-week high of 4.192%, while the 2-year Treasury yield is at a 2-month high of 4.484%. Given obstacles in dollar strength, surging yields, and Fed ambiguity, gold is eyeing a 0.25% weekly downturn at $2,050 an ounce. Silver saw little material change this week and is slightly higher at $22.62. Stocks continued to react to positive economic data this morning, as the S&P 500 closed above 5,000 for the first time ever, with a 1.4% weekly uptick. The Nasdaq Composite and Dow Jones Industrial Average also rallied today and solidified 2.1% and 0.3% respective weekly gains.
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