Gold Tumbles and Stocks Jump Amid Trade Optimism
Last week, gold notched a gain of more than 2%, despite easing trade tensions between the U.S. and China, while U.S. equities posted modest weekly upticks. Throughout this week, markets were largely driven by trade news, with investors closely watching U.S. inflation data for signs of economic health and clues into the Fed’s next move.
Gold began the week at $3,279 but fell nearly 3% to $3,241 an ounce during Monday’s trading, following news that the U.S. and China had agreed to temporarily reduce tariffs. Meanwhile, optimism around the trade deal lifted Wall Street sentiment, with the S&P 500 climbing over 3% and the Nasdaq Composite leading the way with gains of more than 4%.
Easing trade tensions continued to support stocks on Tuesday, as the S&P 500 clawed its way back into positive territory for the year. Notably, tech stocks surged amid reports that NVIDIA planned to ship nearly 20,000 AI chips to Saudi Arabia, following talks between President Trump and the Crown Prince.
Stocks found additional tailwinds from softer-than-expected CPI data released by the Bureau of Labor Statistics, which showed that consumer prices rose by 2.3% year-over-year in April—down from 2.4% in March and below forecasts of 2.4%. The better-than-expected inflation data increased the odds of rate cuts, which supported gold. Bargain-hunting investors also helped lift gold back to around $3,258 an ounce, while silver hovered near $32.70.
Wednesday’s trading was marked by increased risk-on sentiment among investors, driven by trade optimism and encouraging inflation data. Naturally, this dented gold’s appeal, with the yellow metal falling to a one-month low near $3,148. Elsewhere, equities posted a mixed daily performance, though the Nasdaq notched its sixth consecutive winning session.
Gold managed to pare some of its losses on Thursday, after data showed that producer prices declined by the most since 2009. The metal also found support in a 0.2% drop in the U.S. dollar index, ultimately ending the day 2.3% higher at $3,218. Wall Street traders weighed the week’s encouraging economic data against ongoing trade uncertainty, leading to another mixed session. Most notably, the Nasdaq dipped 0.2%, snapping its six-day winning streak, while the S&P 500 edged up by 0.3%.
Equities moved higher this afternoon, as investors digested President Trump’s newly proposed tax and spending bill. Following the day’s gains, the Nasdaq led the major averages with a 2.71% weekly gain, while the S&P 500 and Dow posted respective increases of 2.45% and 1.73%.
However, gold slipped another 2% Friday morning, as risk appetite strengthened on the heels of the U.S.-China trade deal, pressuring bullion lower. Ultimately, gold ended the week down 2.6% at $3,194, while silver fell 1.8% to $32.25.