Precious Metals Post Weekly Gains Amid Middle East Tensions
Last week, gold managed to achieve new all-time highs above $2,400 despite the odds of a June cate cut tumbling to 16.5%, from nearly 60% the week prior. This week, precious metals again proved to be resilient despite Fed hawkishness, with continued safe-haven support stemming from geopolitical political woes in the Middle East.
On Monday, investors were greeted with stronger-than-expected U.S. retail sales data, which revealed a 0.7% uptick in consumer spending throughout March, when a 0.3% increase had been forecasted by economists. The positive economic news further dented the odds of a near term interest rate cut, and boosted U.S. Treasury yields. Most notably, the 10-year Treasury yield ticked up to 4.661% for the first time in five months. Despite higher yields, gold jumped from $2,357 to $2,394 Monday, following news that Iran launched a number of missiles and drones into Israel over the weekend.
On Tuesday, Federal Reserve Chair Jerome Powell provided remarks during a panel discussion at the Wilson Center. During the discussion, Powell cautioned that recent higher inflation readings may delay interest rate cuts. Stocks tumbled following Powell’s remarks, while Treasury yields firmed. Despite Powell’s comments and higher yields, gold steadied near $2,390 on Tuesday, as investors awaited further developments in the Middle East.
Stocks wobbled again on Wednesday, while the dollar and Treasury yields also dipped as geopolitical concerns and Fed hawkishness weighed heavily on investor sentiment. Meanwhile, gold fell to $2,374 amid profit taking, while silver saw little change at $28.44 an ounce.
Despite more robust U.S. economic data and a slightly lower-than-expected jobless claims print, gold saw little change on Thursday, and hovered around the $2,371 level. Investor uncertainty and rising bond yields pressured the S&P 500 and Nasdaq Composite lower for the fifth straight session on Thursday, while the Dow Jones Industrial Average ended the day slightly higher.
Fears over Iran’s retaliation and the potential for further escalation in the region, triggered further safe-haven support for gold this morning. As a result, gold secured its fifth weekly uptick and a weekly gain of 1.4%, at a closing price of $2,391. Meanwhile, silver ended the week modestly higher at $28.67.
Sticky inflation and geopolitical concerns meant that caution would again prevail on Wall Street today. As a result, the Nasdaq Composite fell for its sixth consecutive session, as all three major averages headed for weekly losses. At the end of trading, the Nasdaq Composite notched a staggering 6.1% weekly downturn, while the S&P 500 fell by 3.5% on the week. The Dow Jones Industrial Average fared better with a 0.23% weekly loss.