Gold & Silver Decline Amid Dollar Gains


Last week saw a modest decline for both gold and silver. At the same time, U.S equities endured a sell-off and losing week amid rumblings of increasingly hawkish monetary policy from the Federal Reserve. Bullion prices started this week in a battle with a familiar technical foe on the dollar. 

Gold started the week near $1,931 and encountered pressure as the dollar index once again neared two-year highs. Global growth concerns fueled dollar demand, sending gold closer to the $1,900 level as the trading day drew to a close. Silver started the week just above the $24 mark but would shed 1.6% on Monday.

Stocks were mixed on Monday. Headlines were dominated by news that Twitter had approved Elon Musk’s $44 billion acquisition bid. Twitter stock trading had previously been halted but resumed, allowing shares to rise following the announcement. 

Fears of an economic downturn led investors to sell riskier assets on Tuesday, ushering in a sharp downturn for stocks. The Nasdaq suffered the most out of the major averages, dropping almost 4% on its way to a 2022 low. Gold was mostly flat on Tuesday, hovering near one-month lows just below $1,900. 

Fueled by Fed policy speculation, the dollar saw more gains on Wednesday, pressuring gold to around $1,884 an ounce. Investors were looking to next week’s May FOMC meeting in which many believe a 50-basis point rate hike will be announced, along with specifics on reduction of the Fed’s $9 trillion balance sheet. 

Treasury yields had been drifting lower but saw modest gains Wednesday. This also weighed on precious metals. Silver was slightly lower as a result, falling just over 1% to $23.31 an ounce. Investors were eyeing jobless claims and corporate earnings ahead of Thursday, but a surprise contraction in the U.S. economy quickly overtook headlines. 

On Thursday it was reported that U.S. GDP fell 1.4% in the first quarter of 2022. This marked the first GDP slide in the U.S. since the spring of 2020 and cut against even the most conservative forecasts of 1% growth. Despite this, Wall Street staged a rally with stocks jumping amid positive corporate earnings data from companies such as Meta, Southwest, and Qualcomm. 

The unexpected decline in GDP drove concerns over global growth. This favored the dollar which is set for its best month in over six years. On Thursday, gold and silver found respective weekly lows at $1,872 and $22.96. 

The dollar rally paused on Friday, allowing gold to gain 1.4%. Currently, gold is at $1,909, which is 1.2% lower for the week. Silver shed 3.7% this week and is currently sitting at $23.12 an ounce. While uncertainty still plagues investor sentiment, metals have not been able to overcome dollar gains. 

On the final day of trading, gold is 1.3% lower and dollar index is 4.9% higher. Stocks have not faired well in April, leaving the S&P 500 down by 6.1% while the Nasdaq is nearly 11% lower. 

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