20/05/2024: The Week Ahead in Gold & Silver Markets: 

20/05/2024: The Week Ahead in Gold & Silver Markets: 

Last Week’s Price Recap: 

Gold & Silver both closed higher last week, making it 2 consecutive weekly closes higher for each. 

Gold closed 2.3% higher, while silver closed 11.8% to the upside, pushing past $30 per ounce and hitting 10 year highs in the meantime. 

Introduction:

As we navigate through another week in the financial markets, gold and silver investors are keenly eyeing a mix of economic indicators, central bank speeches, and geopolitical developments that could shape the precious metals landscape. Here’s a breakdown of the key events and their potential impact on gold and silver prices:

Monday, May 20th: FED Members Bostic, Barr, and Waller Speak: 

The week kicks off with a trio of FED officials delivering speeches. When multiple FED officials speak, markets often seek clues about future monetary policy direction. If Bostic, Barr, and Waller hint at cutting interest rates soon then this could put upward pressure on gold and silver prices, as lowering rates make non-yielding assets like precious metals more attractive to investors. Conversely, any hawkish commentary suggesting potential pauses or hikes in the near future could dampen gold and silver as investors anticipate a higher for longer interest rate environment.

Wednesday, May 22nd: U.K. CPI & FOMC Meeting Minutes: 

  • U.K. CPI (Y-o-Y): 

Analysts expect the U.K. CPI to come in at 2.1%, down from the previous month’s 3.2%. A significant drop in inflation might suggest that the Bank of England could consider rate cuts sooner than anticipated. In the current high interest rate environment, lower inflation reduces the need for aggressive monetary policy, potentially leading to lower rates which would be supportive for gold and silver prices as the opportunity cost of holding these non-yielding assets decreases.

  •  FOMC Meeting Minutes:

The release of the FOMC Meeting Minutes will be scrutinised for any hints on future monetary policy. Detailed discussions on the economic outlook and policy inclinations could provide insights into the FED’s stance on interest rates. Any indication of a potential pivot towards a more dovish policy could be positive for gold and silver markets.

  • ECB President Christine Lagarde Speaks:

Christine Lagarde’s speech will be closely watched for any indications regarding the ECB’s future monetary policy. If she signals a continuation of accommodative policies or hints at concerns about economic growth, this could weaken the euro and boost gold and silver prices in euro terms. Conversely, any hawkish tone could have the opposite effect.

Thursday, May 23rd: Manufacturing, Composite, Services PMI Data & Initial Jobless Claims: 

  •  EU, U.K., U.S. PMI Data:

Analysts expect slight improvements in most EU PMI figures, with the Manufacturing PMI anticipated at 46.2, up from 45.7. Composite PMI is expected to come in at 52, up from 51.7, and Services PMI is expected to come in at 53.6, a rise from the previous month’s figure of 53.. 

Similarly, the U.K. Manufacturing PMI is expected to rise to 49.5 from 49.1, with Services PMI forecasted to slightly dip to 54.7 from 55.

For the U.S., Manufacturing PMI is expected to come in at 50.1, which would be a fractional rise from the previous month’s figure of 50. Analysts expect Services PMI to come in at 51.5 which would also be a slight increase from the previous month’s figure of 51.3. 

PMI figures are crucial as they indicate the economic health of the manufacturing and services sectors. A rise in PMI figures generally signals economic expansion, which might reduce the appeal of safe-haven assets like gold and silver. However, if these increases are modest, indicating tepid growth, the impact on precious metals might be limited. Any PMI figures that fall short of expectations could bolster gold and silver prices as investors seek safety.

  • Initial Jobless Claims:

Initial jobless claims are expected to come in at 221,000, a slight decrease from the previous week’s 222,000. Stable or decreasing jobless claims indicate a strong labour market, which might support higher interest rates and put downward pressure on gold and silver. However, if claims unexpectedly rise, it could signal economic weakening, potentially boosting demand for safe-haven assets.

Conclusion:

This week’s heavy calendar of FED speeches, inflation data, PMI figures, and jobless claims will likely provide critical insights into the economic outlook and future monetary policy. Dovish commentary from central bank officials and weaker-than-expected economic data could lift gold and silver prices as investors anticipate lower interest rates. Conversely, any signs of economic resilience and hawkish tones from policymakers might weigh on precious metals. Stay tuned for our next update as we continue to monitor these developments and their impact on the gold and silver markets.