June 4th Market Update


Gold and Silver Decline; All Eyes on Recovery Data

As with previous weeks, gold and silver price action throughout the week was largely driven by factors such as dollar gains/losses, Treasury yield movements, and varying levels of risk appetite on behalf of investors.

The same stockholders would largely base their risk appetite off economic recovery barometers, inflationary indicators, and clues from the Fed as to what type of monetary policy may be pursued as a result.

Silver and gold would begin the week around four and five-month highs, respectively. Both were driven by inflows from investors fleeing a volatile crypto market, while gold had momentum from easing U.S. yields.

On Tuesday (the beginning of the trading week), gold touched $1,915 an ounce as a weaker dollar and inflation angst made the yellow metal more attractive for those seeking a safe haven asset.

Gold slid downward by just over 1% on Tuesday. This would be attributed to a better-than-expected U.S. ISM Manufacturing PMI rise to 61.2, compared to the forecasted level of 60.7.

Still, gold would prove resilient and maintain levels near $1,908 through Wednesday.

Gold dipped by more than 2% on Thursday, reaching a two-week low near $1,860. This time, a variety of factors would weigh on the precious metal. One of these factors being positive U.S. jobs data, as for the fifth straight week, the number of Americans filing for unemployment dropped.

Jobless claims have decreased by 35% since late April, according to the U.S. Labor Department.

Rising yields also pressured gold. The benchmark 10-year yield gained 1.63%, and the dollar index (DXY) would rise to three-week highs around 90.55.

Gold would end Thursday closer to $1,868 while investors waited for non-farm payroll data to be released on Friday morning.

Silver started the month off right, coming off its highest weekly close of 2021. Silver’s weekly peak would occur on Monday, at around $28.50.

Silver would see an initial pull back on Wednesday, but quickly recovered while dollar declines would support silver just above $28.10 through Wednesday and into Thursday morning.

Silver enthusiasts remain observant of dollar performance, as the pair seems to continue their near inverse relationship of past weeks. Silver would succumb on Thursday, amid the same dollar rise that pressured gold. In fact, silver would reach three-week lows near $27.15.

Gold rallied a bit after the much-anticipated release of U.S. jobs data. U.S. non-farm payroll employment climbed by 559,000, less than the expected 621,000. For some, this is a signal that the economy may not be growing fast enough to justify talks of tapering by the Fed. This sentiment can boost gold appeal.

Silver would bounce off its three-week lows while there was a slight dollar dip amid the aforementioned jobs news. Currently, silver is at about $27.75, which would be a decline of more than 2.5% from its weekly high. As of now, gold is hovering around $1,890. This would still be a weekly loss of about 1.3% from its highs earlier in the week. Overall, it seems that positive economic data would certainly pressure these commodities mid-week. However, neither seem to have corrected as much as some predicted.

Back to Insights