June 21st Market Update
Stocks and Gold Rebound While Yields Decline
Last week concluded as one of the worst for both gold and silver since March of 2020. Gold would drop by more than 5%, while silver lost more than 6%. Almost all of last week's price movement came after the Fed announced possible rate changes in 2023 or sooner, while acknowledging inflationary concerns by lifting inflation projections for 2021.
Conversely, the Dollar Index had its best week since early 2020, having gained almost 1.9%. It's clear that gold and silver both have been reactive to movements in the Dollar Index and Treasury yields. Investors may keep a close eye on the dollar and yields to better understand where gold and silver may head next.
Currently, gold is hovering near $1,778 an ounce, up almost 1% from Friday lows. Right now, silver is near the $25.95 mark. It seems gold gained support from declining Treasury yields, as the 10-year yield dropped to four-month lows today.
Meanwhile, U.S. stocks are starting the week off higher, as some are buying the dip from last week's sell-off. Popular cryptocurrencies saw a sharp decline to start the week after China announced further crackdowns on trading. This prompted a significant sell-off, sending Bitcoin down by over 10%.
Investors will continue to gauge inflation barometers throughout this week. Tomorrow, Fed Chairman Jerome Powell will testify before Congress. Weekly jobless claims will be released Thursday, while more inflation data will be released on Friday via the Core PCE Price Index.
The above events will be of importance for gold and silver enthusiasts, as inflation and possible tapering will likely help determine investors' risk appetite in the near future. If risk appetite declines or inflationary concerns persist, gold and silver may find buyers seeking safe-haven assets.
Historically, investors have also utilized yields and the dollar as safe-haven assets, so gold and silver will compete there and thus may continue to be reactive to price movements in those markets.