Precious Metals See Weekly Gains Amid Middle-East Tensions
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Last week, gold and silver saw weekly losses following news of a surprising uptick in U.S. payrolls for the month of December. This week, markets were largely driven by Fed policy bets along with inflation data, which was released on Thursday.
On Monday, gold dipped to a 3-week low below $2,030 following Friday’s surprising payroll news. For some, the stronger employment news lessened the odds of rate cuts in 2024. Silver started the week at $23.03 and would see little change until Wednesday. Meanwhile, U.S. stocks rose on Monday, following last week’s sell off where major Wall Street averages snapped their 9-week winning streaks.
Stocks were mixed on Tuesday, while gold saw a modest decline to $2,027 an ounce. On the same day, silver dipped below $23.00, as bond yields inched higher. Gold encountered some more downward pressure on Wednesday as yields continued higher and the odds of a Fed rate cut in March dropped below 65%, according to the CME Group FedWatch Tool.
On Thursday, news broke that the consumer price index rose by 0.3% in December. This exceeded the forecasted 0.2% rise and marked the most significant uptick in that inflation measure in three months, while also raising additional questions as to whether the Federal Reserve will cut rates as soon as expected.
Gold initially fell to a 1-month low of $2,014 following the inflation reading, as Treasury yields surged higher. However, this trend reversed before the end of Thursday’s trading, as gold pared losses and ended the day slightly higher, at $2,034. On the same day, Bitcoin jumped to a 2-year high of $48,711 as multiple Bitcoin ETFs began trading after being granted approval from the SEC.
Gold and silver rose sharply this morning amid safe-haven inflows, following news that the U.S. and U.K. had conducted strikes against Iranian-backed Houthi rebels in Yemen late Thursday. These were characterized as retaliatory strikes against the Houthi militia group following their recent missile and drone attacks on cargo ships in the Red Sea.
Following the news, gold touched a 1-week high of 2,062, while silver touched $23.50 an ounce. Both metals have since pared gains but are eying weekly upticks. As this is written gold is at $2,047 which, if maintained, would mark a 0.7% weekly gain for the yellow metal. Meanwhile, silver is 0.5% higher for the week, at $23.33 an ounce.
Stocks have been choppy this morning, following mixed quarterly earnings from major banks in JPMorgan Chase, Wells Fargo, and Bank of America. Currently, all three major averages are eyeing weekly gains. Most notably, the Nasdaq Composite is 2.7% higher for the week, while the S&P 500 and Dow Jones Industrial average are looking at 1.6% and 0.8% respective weekly gains.
