June 25th Market Update
Gold Looks to End Losing Streak as Stocks Surge
Precious metals are wrapping up a relatively calm week, compared to last week, in which a more hawkish Fed stance and subsequent dollar rally led to a decline of more than 5% for both gold and silver. Heading into this week, investors were focused on monetary policy clues and inflation data.
Gold started the week around $1,783 an ounce, while the Dollar Index ended Monday close to two-month highs. Silver opened the week closer to $25.90 an ounce.
Fed officials offered some hints throughout the week but little update on potential rate hikes or tapering. In testimony before Congress on Tuesday, Fed Chairman Jerome Powell stated that inflation has “increased notably in recent months” but attributed much of this to supply disruptions and a reopening economy.
Tuesday would see another notable decline in the cryptocurrency market as Bitcoin dropped below $30,000 for the first time since January. This sudden drop came just after the People’s Bank of China demanded that financial institutions halt cryptocurrency transactions.
On the same day, the Dollar Index declined after Powell also indicated that the Fed would continue efforts to support the U.S. economy as it reopens and Americans go back to work. As the dollar dipped, gold gained modestly, reaching a daily peak just below $1,790. Silver would slide by 1% to around the $25.70 mark.
American markets remained quiet until it was announced on Thursday that Congress had agreed in principle on a $1 trillion infrastructure bill. U.S. stocks surged. The S&P 500 and Nasdaq would both reach record closing highs on the same day.
Gold dipped closer to $1,774 by Thursday evening as stocks continued to run. Additional inflation data was released today via the core PCE Index, which revealed a May rise of 3.4% in consumer cost for goods and services from 2020. Stocks would continue towards fresh highs after this inflation data was released.
Meanwhile, the dollar rally has stalled as the Dollar Index (DXY) is down by more than 0.8% from its Monday highs. This provided some fuel for a modest gold recovery. Currently, gold is looking to snap a three-week losing streak and is sitting near $1,787 an ounce. This is up about 1% from its Monday lows. Right now, silver is around $26.20, up by just over 1% for the week.