Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data and headlines that had the most impact on gold prices—and may continue to into the future—as well as the charts for silver, the US Dollar and other key correlated assets.
Gold prices are ending the trading week moderately lower than Sunday evening’s opening bids, thanks mostly to a very muted week of trading across financial markets which deprived the yellow metal of any meaningful direction momentum.
So, what kind of week has it been?
The precious metals markets got all of their activity of the way early this week, and the same can be said for US equity markets. The resurgent number of new Covid-19 infections in the US—thanks largely to the more challenging Delta variant of the virus, aided by slowing progress in the effort to fully vaccinate the adult US population—gripped investors’ imagination around the globe on Monday. In an aggressive swing away from risk-taking, global equity markets sold off dramatically.
Gold prices didn’t show quite the same weakness on Monday. In fact, the yellow metal enjoyed a brief late-morning rally after demonstrating strong support just below $1800/oz. Still, it was a mostly lackluster day for gold and silver traders to start the week, with the reflation and reopening trade that has been such a tailwind being firmly pinned to the mat.
During the overnight sessions, gold prices presented the strongest (and farthest) rally of the week, benefiting from overseas’ investor interest while the benchmark 10-year Treasury Note’s yield temporarily slid below 1.2% for the first time in several months. At its peak, the spot delivery price for gold traded as high as $1823/oz as US stock markets were opening.
- Silver prices lacked gold’s momentum from the start of the week. One likely reason for this is silver’s closer ties to the fortunes of the overall commodities index, which has been muted by lower oil prices this week after OPEC+ announced an agreement to increase production over the next year.
On Tuesday, global markets (particularly US equities) enjoyed a sharp reversal of fortune. As we’ve seen several times since the harshest days of the 2020 lockdowns, the major US stock indexes all corrected sharply higher despite no real alteration or abatement of the storm clouds that had so frightened investors in the session(s) before. The US stock market swung forcefully back into the reopening trade, boosting the S&P 500, Dow, and NASDAQ benchmarks to gains well above 1% on the day.
Gold prices, however, were not invited to join in the relief. Once investors’ attention was turned to the resurgent equity markets on Tuesday morning, the overall market mood shifted so aggressively into “risk-on” mode that gold was largely left out of the day’ rally.
The remainder of the week has seemed sparsely attended and lightly traded, thanks to the lack of newsflow or meaningful economic data in these slow summer days. US stock indexes have stayed mostly in the green each day, but with little momentum. The takeaway for gold markets should be how vulnerable the yellow metal’s upward path becomes when both bullish and bearish investors are left in search of any kind of catalyst for gold and other safe havens. Since the sharp drop on Tuesday morning, gold prices have slid slow-but-steadily lower; It seems safe to say that, lacking any directional signals or shocks, gold will tend to drift downward this summer.
- The only thing (at the time of writing) that seems to have prevented gold’s spot price from closing this week below the key level of $1800/oz and seriously threatening support was a surprisingly poor Initial Jobless Claims number on Thursday morning that—whether as a function of risk aversion, or as a signal that the Fed’s criteria for raising interest rates remain well out of reach—drove a brief rush of investors’ interest and positions into gold.
Luckily, in theory, for gold momentum, next week’s calendar is a little busier.
- The July FOMC meeting (ending Wednesday) is of course the centerpiece of the week: While we’re unlikely to see any real adjustments, Chair Powell’s press conference following the meeting may help to confirm the current expectations that Fed forward guidance (specifically, relating to tapering asset purchases) will change in August.
- At the end of the week, we’ll get an update to the Fed’s own measurements of consumer inflation in the US, to see how that pairs with the unexpected uptick in CPI reported last week.
For now, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see everyone back here on Monday for our preview of the week ahead.