Precious Metals See Weekly Losses Amid Positive Employment News and Fed Speak
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Last week, gold solidified a modest weekly uptick and ended the year 13.1% higher. Meanwhile, silver diverged from gold, and ended the year 0.7% lower. This week, markets were driven by Fed policy bets and employment data.
Major markets were closed on Monday in observance of New Years Day. Gold and silver started the trading week off on Tuesday, at $2,074 and $24.04, respectively. The pair dipped on Tuesday, as the dollar index saw its most significant daily uptick in five months, of 0.9%. Meanwhile, U.S. equities encountered a sell-off to start the year, which meant that all three major averages would see declines on Tuesday.
On Wednesday, investors were greeted by the minutes from the Fed’s December 2023 policy meeting. The meeting minutes indicated that committee members largely agreed that higher rates were on the table if inflation were to persist. Additionally, most participants agreed that rate cuts “would be appropriate by the end of 2024.” However, no clues were given as to the timing of potential rate cuts.
Given the unexpectedly hawkish tone captured in the meeting minutes, stocks extended losses on Tuesday, while the dollar and Treasury yields both surged higher. These developments caused gold to dip by 1.6% to a 3-week low of $2,031 while silver fell below $23. Gold pared some of its losses and would end Tuesday’s trading near $2,044 an ounce.
Following four consecutive sessions of losses, gold steadied near $2,046 on Thursday, while silver saw little change near $23 an ounce as investors braced for employment data, which was set for release on Friday.
This morning, the much-anticipated U.S. employment report was released, which revealed that 216,000 new jobs were added in December, when economists predicted 170,000. Meanwhile, the U.S. unemployment rate remained unchanged at 3.7%. Investors assessed the better-than-expected employment data as a variable that may delay the Fed’s first round of rate cuts.
While stocks have been mixed this morning, major averages in the U.S. are eying a possible end to a nine-week winning streak. The Nasdaq Composite is eying the most significant weekly downturn at 3.81%, while the S&P 500 and Dow Jones Industrial Average are closing in on 1.96% and 0.98% respective weekly downturns.
Gold encountered a sharp selloff flowing today’s Nonfarm payroll news, and is currently 1.6% lower for the week, at $2,041 an ounce. As this is written, silver is hovering near $23.14, which would be a 3.7% weekly loss for the gray metal.
