Gold Snaps a Five-Week Winning Streak as Middle-East Tensions Ease
Last week, gold secured its fifth straight weekly uptick, as fears of escalating conflict in the Middle East drove safe haven buying. Gold encountered downward pressure throughout this week as Middle East concern ebbed and economic data casted further doubt on interest rate cuts. Investors were focused on this week’s calendar of economic events, with U.S. GDP data due out on Thursday, and inflation numbers set for release this morning.
On Monday, major stock market averages in the U.S. managed to snap a losing streak that lasted six consecutive sessions. Meanwhile, gold corrected and would end the day nearly 3% lower, at $2,306 an ounce. This marked gold’s worst one-day decline in over two years, as tensions eased in the Middle East. In a similar move, silver dipped by 3.5% to a closing price of $26.99.
U.S. equities continued to gain ground on Tuesday, amid positive earnings news from companies like General Motors. On the same day, gold managed to pare some of its losses from the previous session but would remain near a three-week low of $2,318.
Gold languished around the $2,325 level throughout Wednesday, as the dollar index rose by 0.3%, making the yellow metal less attractive to overseas buyers. Meanwhile, Wall Street stocks were mixed as investors braced for Thursday’s GDP data.
On Thursday, GDP data showed that U.S. economic growth in the first quarter of 2024 slowed to 1.6%, when 2.2% was expected. The report also revealed higher-than-expected inflation data, which pressured the dollar lower. Despite the inflation news, gold managed to edge higher as the dollar index declined. By the end of Thursday’s trading, gold firmed at $2,336 while silver saw little change, at $27.13. On the same day, Investor concern over slow economic growth and sticky inflation drove stocks lower.
Stocks climbed higher this morning, as investors digested positives earnings data from tech companies such as Microsoft and Alphabet. In addition to tech earnings, stocks were supported by news that the Fed’s preferred inflation gauge was up by 2.7% from last year, which was in line with expectations.
Major stock market averages managed to end the week in the green. Most notably, the Nasdaq Composite posted a 3.46% weekly gain, while the Dow Jones Industrial Average and S&P 500 notched 0.31% and 2.26% respective weekly gains. Given diminished Middle East concerns, gold snapped its five-week winning streak with a 1.4% weekly loss, at $2,337 an ounce. Meanwhile, silver ended the week 2.8% lower at $27.21.