Gold and Silver See a Weekly Divergence as Inflation Persists

Last week, gold fell amid uncertainty regarding monetary policy and surging bond yields. This week’s calendar of economic events was filled with Fed speaking events, inflation news, and other economic data releases. This week, gold and silver prices were again driven by Fed policy bets and Treasury yields.

Gold and silver started the week off at $2,025 and $22.84, respectively. The pair saw little movement on Monday, as investors braced for the next round of inflation data, which was set for release on Tuesday. On Tuesday, news broke that consumer prices rose by 0.3% in January, when 0.2% had been forecasted. The hotter-than-expected inflation reading dented the odds of a near-term Fed rate cut.

Subsequently, the dollar and Treasury yields spiked, which pressured gold and silver to the downside. By the end of Tuesday’s trading gold had fallen by 1.6% to $1,992, while silver dipped to a 3-week low of $22.01. U.S. equities also tumbled on Tuesday, as hawkish fed policy bets dented Wall Street sentiment.

On Wednesday, Chicago Fed President Austan Goolsbee provided remarks at the Council of Foreign Relations in New York. During his speech, Goolsbee stated that despite the higher inflation readings, the central bank is still on the right path to the target inflation rate of 2%. This, along with remarks from Fed Vice Chair for Supervision Michael Barr, regarding the banking system seemingly calmed investors, as stocks bounced. Meanwhile, gold ended the day slightly higher while silver managed to break above $22.30.

On Thursday, investors digested weaker-than-expected economic data, which showed that U.S. retail sales fell by 0.8% in January. This marked the biggest dip for retail sales in 10 months. Following this news, the dollar and Treasury yields declined which, in turn, allowed gold to break above $2,000.

Today, more inflation data was released which revealed that wholesale prices rose in January at the fastest pace since September of 2023. Despite this, gold is eyeing a daily uptick, but will likely cement its second consecutive weekly downtown. As this is written, gold is hovering near $2,012, which is 0.6% lower for the week. Silver is eyeing a weekly divergence from gold, at $23.39 an ounce and a 2.4% weekly gain.

Higher inflation numbers and lessened rate cut odds pressured stocks lower for the week. Most notably, the Nasdaq Composite is 1.3% lower for the week while the S&P 500 is likely to snap its 5-week winning streak.