Silver Shines and Gold Gains on Cooler Inflation, Fed Optimism
Share:
Last week, gold and silver managed to end their respective weekly losing streaks following weaker-than-expected employment data on Friday. This week, investors looked closely to Fed speak for clues as to the next round of potential rate hikes as well as inflation data, which was due out Wednesday.
Gold and silver started the week off at $1,928 and $23.01, respectively. The pair would see little change until Wednesday. On Monday, major Wall Street averages in the Dow Jones Industrial, Nasdaq Composite, and S&P 500 posted modest gains. The trio managed to end their 3-day losing streak as investors braced for second-quarter earnings.
On the crypto front, Bitcoin managed to break above $30,000 on Tuesday, following bullish predictions U.K. bank Standard Chartered Plc, and hints from Fed officials that monetary tightening may soon wind down.
On Wednesday, the latest round of CPI data was released which showed consumer prices were still rising in the U.S., but at slower pace than what was predicted. Consumer prices in the U.S. saw their smallest annual increase in two years, gaining 0.2% in June when 0.3% was expected.
For some, the lower inflation print lessened the odds of Fed rate hikes. This meant the dollar would dip while gold jumped. By the end of trading on Wednesday, gold touched $1,960, which was 2% higher for the week. Meanwhile, silver jumped by more than 5% to a closing price of $24.20.
Stocks also rose on Wednesday as Fed rate hike optimism set in. The Nasdaq Composite gained the most at 1.2% as tech shares jumped. However, economists were still pricing in a 90% chance of a 0.25% rate hike at the next Fed policy meeting on July 25-26th.
Despite this, stocks continued to rally into Thursday, as the U.S. producer price index rose by 0.1% in June against the forecast of 0.2%. On the same day, weekly U.S. jobless claims came in lower at 237,000 when 250,000 was expected.
Following the news, the dollar index dipped by 0.9% which benefited precious metals, especially silver. While gold was slightly higher at $1,963 an ounce on Thursday, silver outperformed the yellow metal by gaining 2.6% on its way to a 2-month high of $24.84.
Stocks in the U.S. continued to rise this morning, as stronger-than-expected earnings from big banks such as Wells Fargo and JPMorgan Chase boosted investor sentiment. Currently, the Nasdaq Composite is eyeing the biggest weekly gain of 3.6% while the Dow and S&P 500 are both up by nearly 2.5% for the week.
Today, higher yields have limited gold gains, but the yellow metal is still eyeing a 2% weekly uptick at $1,959 an ounce. Silver continued to outperform gold this morning and is currently at $24.96. If maintained, this would be a 8.5% weekly uptick for silver.
