June 11th Market Update
Inflation and Stocks Rise, While Metals are Mixed.
Gold and silver started the week under some selling pressure, with silver dipping to a weekly low of $24.49 on Monday and gold sliding by over 0.5% to around $1,882 an ounce on the same day. This came after U.S. Treasury Secretary Janet Yellen's remarks on Sunday, indicating that higher interest rates may positively affect the U.S. economy. Both metals would quickly find buyers as attention shifted from last week's job data to inflationary data via this week's Consumer Price Index (CPI) release.
Gold would rise by over 1% as it neared $1,903 by Tuesday. The yellow metal would struggle to maintain levels above the $1,900 mark while the dollar would find footing and traders would await the release of CPI data on Thursday.
Silver would also surge 1.5% from its Monday lows to Tuesday highs around $27.96. Silver didn't move significantly but would drop closer to $27.54 by Wednesday. On the same day, net long positions in the silver futures market would reach a five-week low. Silver would be closer to $27.80 heading into Thursday.
Traders around the globe assumed an anticipatory posture. Although inflation rates in the Eurozone aren't as high as U.S. levels, a similar conversation is being had overseas regarding the European Central Bank (ECB), bond purchasing in response to inflation rates. The central bank would decide to keep rates unchanged and promised more stimulus over the summer months. European stocks would be mixed by Thursday's close, while U.S. investors still awaited inflation data.
Spot gold was around $1,886 heading into Thursday. The much-anticipated release of CPI data revealed a 5% year-on-year increase in consumer prices, which would mark the most significant jump in more than a decade. However, this move wasn't seen as significant enough for the Federal Reserve to adjust monetary policy, as the Fed stance remains that U.S. inflation is still transitory in nature.
U.S. equities would rally on Thursday, as the S&P reached an all-time high, and the Nasdaq Composite climbed by 0.8%. The yield on the 10-year U.S. Treasury notably fell to a three-month low at 1.44%. On Thursday, gold would rise to the $1,898 level while silver would increase to $27.99.
For today, gold is slightly lower while the dollar index is up. Currently, gold is hovering around $1,882 an ounce. This price is close to early Monday levels, leaving the yellow metal with little weekly change in price. Silver, on the other hand, is up on the day. Currently, silver is at $28.15, up by 2.3% from its Monday lows.
Some experts contend that U.S. stocks may rally until more concrete signs of Fed tapering persist, which has been dependent on inflation rates. Gold may also find buyers in those investors who are warier than the Fed, as it pertains to inflation in the U.S.