12/01/2024: This Week in Gold with Market Updates:
Price Action:
Gold Price:
After falling 0.8% last week, gold continued to move lower to start off the second week of the New Year.
Price opened at $2,043 an ounce on Monday and moved 1.2% lower by 1pm GMT. This contrasted a rising DXY. Price seemed to recover slightly in the afternoon as it rose to close the day at $2,028 an ounce, a 0.7% decline for the day.
Price climbed slowly on Tuesday, in an attempt to recoup the losses that were experienced early on Monday morning. Price moved sideways for much of the day, with daily highs and lows trading within 0.8% of one another. Price closed the day $2 higher at $2,030 an ounce. Investors are eagerly awaiting the latest U.S. inflation data, which is usually an integral factor in price movements. Generally, price tends to consolidate in anticipation of economic data.
Similarly to Tuesday, prices held steady on Wednesday. Investors kept their focus on key U.S. inflation data, which was to be released on Thursday. Inflation data is integral in determining the future of interest rates, which have a direct effect on the price of gold. Gold hit daily highs of $2,040 an ounce before reverting back to near the daily mean. Price opened at $2,030 and closed at $2,024, a 0.3% move lower for the day.
Gold had a good start on Thursday, rising $10 an ounce to $2,034 by midday. However, price began to decline slightly prior to the latest U.S. CPI data, and experienced a more dramatic fall once the new inflation figures were released. Gold fell as much as 1% after the fact, to $2,014 an ounce, a new one month low for the yellow metal. Price quickly recovered, bouncing from this new low and pushing higher for the remainder of the day. Gold ultimately closed the day $5 higher.
On Friday, price continued to climb, primarily due to the escalating conflict in the Middle East. This outweighed the recent inflation data, which boosted both the DXY and Treasury yields, as it lifted the appeal for the safe-haven nature of gold as an asset. By midday, gold was 0.8% higher at $2,045 an ounce.
At the time of writing, gold is trading at $2,054 an ounce, which is a 1.2% daily gain. This puts gold up 0.5% for the week.
Silver Price:
Silver opened the week trading at $23.19 an ounce. Price followed gold’s trajectory to start the day on Monday, briefly moving below the $23 level, which has proved to be a level of resistance in recent times. Price quickly rose back above $23 and experienced a gradual rise for the remainder of the day, ultimately closing the day just $0.02 lower.
Price consolidated for much of Tuesday. Similar to gold, silver buyers and sellers were awaiting the latest economic data before making any moves in the market. Towards the end of the trading day, price experienced a slight fall and closed the day 0.5% lower at $22.98.
Silver continued to consolidate for most of Wednesday, with slight fluctuations experienced throughout the day. Price closed $0.10 lower for the day.
After a slight gradual increase during the early hours of trading on Friday, price began to fall upon the release of the latest inflation data in the U.S. Within the space of 4 hours, price plummeted 2.3% to $22.52 as investors’ hopes of rate cuts were diminished. Like gold, however, silver experienced a resurgence after hitting a new monthly low. Price began to climb towards the end of the day and regained $0.23 to close the day only 0.7% lower at $22.75 an ounce.
On Friday, price began to climb throughout the day, mostly backed by an escalation in the war in the Middle East. This increased investor desire for precious metals, due to the safe-haven nature that surrounds them. At the time of writing, price is currently $23.33 an ounce, a 2.5% daily gain. Silver is currently up 0.6% for the week.
Market Updates:
U.S. CPI:
U.S. inflation was seen to rise more than expected in December.
Prices rose by 0.3% last month, which was slightly higher than the 0.2% that was expected.
Y-o-Y, CPI rose 3.4%, which also came in higher than the expected 3.2%.
This data had an instant impact on the price of both gold and silver, causing a decline in the value of both. This is due to diminishing investor hopes for early rate cuts. With a rise in inflation, it would be expected that the FED may wait even longer now to start cutting rates.
Bitcoin ETF:
Also on Thursday was the approval and release of 11 spot bitcoin ETF’s (exchange-traded funds).
This move seems to mark the beginning of Wall Street’s approval of Bitcoin.
Price of another cryptocurrency, ETH (Ethereum), seemed to benefit from the approval more than Bitcoin. This is mainly due to the fact that the effect had already been priced into bitcoin’s price prior to the approval of the ETF’s. Traders turned their attention to the second most popular coin, in anticipation of a potential ETH ETF now that bitcoin has gained approval.
Middle East Conflict:
On Friday, the U.S. and the U.K. led airstrikes on Houthi rebel targets in Yemen.
The two nations carried out around 70 airstrikes early on in the day in an attempt to deter Houthi rebel attacks on ships in the Middle East.
This led to a surge in the price of gold on Friday as investors flocked to the safe-haven asset.
