22/12/2023: This Week in Gold with Market Updates:
Price Action:
Gold:
Gold opened the week trading at $2,019 an ounce. Price closed the previous week 0.7% higher, making it 4 weekly closes higher out of 5. Price has been showing consistency above the previous psychological resistance level of $2,000 an ounce for some time now.
Price gradually moved higher throughout Monday, hitting a high of $2,034 during the evening before falling slightly to close the day at $2,027 an ounce, a daily gain of 0.4%.
After consolidating on Tuesday morning, gold jumped $18 an ounce within the space of 5 hours. Price closed the day 0.7% higher at $2,041. The rise throughout the day was propped up by a 0.4% decline in the U.S. dollar. Also, benchmark Treasury yields were near 5 month lows, another contributing factor to gold’s success. Gold is benefiting from market bets that the FED will cut rates before achieving the 2% inflation target.
Price fell slightly on Wednesday, closing 0.49% to close the day at $2,032 an ounce. Price stayed within a thin trading range which was established earlier in the week.
Price made a push to the upside on Thursday, with noticeable gains being made after midday. With a further retreat in the DXY after new economic data in the U.S., expectations of a FED rate cut early next year increased. Gold opened at $2,032 an ounce and consolidated until midday before gaining $14 an ounce to close the day 0.68% higher.
Gold rose to new three-week highs on Friday as the dollar and Treasury yields moved to the downside. This was in the run up to key U.S. inflation data which would offer investors more clarity on future monetary policy from the FED. In the hours leading up to midday, gold moved 0.7% to the upside. At the time of writing, gold is continuously moving to new highs.
Silver:
Silver opened the week trading at $23.84 an ounce. After closing the previous week 3.6% higher, silver followed gold in finishing higher 4 of the last 5 weeks.
Price began Monday by trending upwards, pushing past the $24 an ounce level around midday before reversing course. Price finished the day slightly lower at $23.80 an ounce.
On Tuesday, silver consolidated within a narrow range for much of the morning before following in gold’s footsteps and surging higher around midday.
Silver experienced a move to the upside on Wednesday, hitting highs of $24.44 an ounce throughout the day. Price bounced off of this high and began gradually moving lower towards the close of trading. Price ultimately closed the day at $24.15, a $0.10 an ounce, or 0.4%, gain for the day.
Moving into Thursday, price made a gradual move to the upside. Opening at $24.15 an ounce, silver trended higher throughout the day. This led to silver closing 1% higher for the day. Although being a higher percentage gain compared to gold, the rise was not as dramatic.
Silver’s moves throughout the day on Friday did not move in tandem with gold’s. Although the price was up at the time of writing, silver did not react to heightened expectation of interest rate cuts as much as gold did throughout the day.
Market Updates:
ECB CPI: Tuesday
Core CPI (MoM & YoY):
The ECB released inflation data on Tuesday, which gave investors an insight into what future monetary policy the Central Bank will have.
Core CPI, which excludes volatile food and energy prices, was down 0.6% for the month. His was in line with expectations and beat the previous month’s figure of 0.2%.
Y-o-Y, core CPI rose 3.6% which was in line with expectations while also beating the previous month’s figure of 4.2%.
With favourable inflation data, the ECB will follow the data-dependent approach that it has taken with interest rates and act accordingly. This may mean earlier than expected rate cuts.
Headline CPI (MoM & YoY):
Headline inflation, which is looked at less than core by the Central Bank, showed M-o-M CPI to fall by 0.6%, beating expectations of 0.5%.
Y-o-Y, CPI cooled to 2.4%, down from the previous month’s figure of 2.9%.
U.K. CPI: Wednesday
Core CPI (MoM & YoY):
The U.K. also released inflation data during the week. On Wednesday, U.K. CPI data was released.
Month-on-Month, core CPI was shown to decrease by 0.3%. This meant that prices fell in the month of November, similarly to the ECB. This beat expectations.
Year-on-Year, core CPI cooled to 5.1%, down 0.6% from the previous month’s figure.
Like the ECB, the BOE will act accordingly with the new inflation data, with many investors expecting the Central Bank to cut interest rates.
Headline CPI (MoM & YoY):
Headline CPI was also shown to beat expectations.
In the month of November, prices fell 0.2%.
Year-on-Year, CPI cooled to 3.9%, beating expectations of 4.3% and the previous month’s figure of 4.6%.
U.S. Consumer Confidence: Wednesday
Also on Wednesday was the release of the latest consumer confidence data from the U.S.
Consumer confidence was shown to increase in the month of November. Data showed the confidence measure to increase to 110.7 which beat the forecast of 103.8 and the previous month’s figure of 101.
When this level increases, it generally means that consumers have more confidence in the U.S. economy. When consumers are optimistic, they tend to spend more which increases consumption and overall economic growth. This is usually a bullish move for the DXY and may be why gold prices steadied on Wednesday.
U.S. GDP: Thursday
QoQ:
On Thursday, U.S. GDP data showed the U.S. economy to grow 4.9% for the quarter. This beat the previous quarter’s figure of 2.1% but did not beat expectations of 5.2%. This, coupled with a falling dollar, led to a rise in gold.
U.S. PCE: Friday
U.S. PCE, which tracks personal consumption expenditure and which is the FED’s preferred inflation measure, is to be released on Friday.
The expectation is for PCE to rise 3.4%, which would marginally beat the previous month’s figure of 3.5%.
This data will give investors more of an idea of how the FED will move forward with monetary policy, specifically interest rates.
