Precious Metals Dip as the Dollar Firms
Last week, gold and silver saw weekly gains following dovish remarks from Federal Reserve Chair Jerome Powell and subsequent dollar downturns. Amid a lighter schedule of economic events, Inflation data set for release today garnered the attention of investors looking for clues as to how much interest rates would be slashed in September.
U.S. stocks were mixed on Monday as Wall Street investors looked ahead to Wednesday’s release of Nvidia earnings. At the same time, investors digested dovish comments made by Fed Chair Jerome Powell at the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming, last week. Rate cut optimism supported gold, as the yellow metal gained 0.3% on Monday. Meanwhile, silver notched a modest gain at $29.96 as precious metals also enjoyed safe-haven inflows following weekend clashes between the IDF and Hezbollah.
On Tuesday, gold firmed and ended the day at $2,514 as the dollar index slipped. Further gains were capped as investors remained uncertain about the probability of a 0.25% or 0.50% rate cut in the coming weeks. Meanwhile, the Dow Jones Industrial Average recorded its second record close, as investors anticipated Wednesday’s Nvidia earnings report.
On Wednesday, AI chipmaker Nvidia released earnings which slightly exceeded Wall Street expectations. Despite the positive earnings data, Nvidia shares tumbled by more than 5% following the report. Subsequently, all three major averages fell. Elsewhere, gold fell by 0.8% on Wednesday, as the dollar index rose by 0.6%, making the yellow metal more expensive for foreign currency holders.
On Thursday, data from the National Association of Realtors (NAR) revealed that pending home sales fell by 5.5% in July to an all-time low. In contrast, jobless claims data showed that Americans filing for unemployment benefits fell by 2,000 from the previous week. Stocks were mixed following the economic data, as the Dow clinched another fresh record close. Meanwhile, the S&P 500 and Nasdaq Composite were dragged down by a dip in tech shares.
Gold saw little change on Thursday, near $2,516 as investors awaited the release of Friday’s inflation data. This morning, inflation data from the Commerce Department revealed the personal consumption expenditures (PCE) price index rose 0.2% last month.
While this number was in keeping with economists’ expectations, the dollar and Treasury yields both firmed, which pressured gold to the downside. As a result, gold shed 1% on its way to a closing price of $2,502 and a modest 0.3% weekly downturn. In a similar move, silver slipped below $29 for the first time in a week for a 3% weekly loss.
Stocks jumped following this morning’s inflation news, as the data supported the odds of imminent interest rate cuts. Most notably, the Dow Jones Industrial Average posted a 0.88% weekly gain while the S&P 500 climbed a modest 0.15% on a weekly basis., Meanwhile, the tech-heavy Nasdaq lost 0.81% this week.