10/06/2024: The Week Ahead in Gold & Silver Markets:

10/06/2024: The Week Ahead in Gold & Silver Markets:

Last Week’s Price Recap: 

Gold closed the week 1.43% lower last week, with much of the decline coming on Friday after the release of Non-Farm payroll data. 

Silver closed the week 4.04% lower, also due to the release of strong jobs data from the U.S.

This Week Ahead: 

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:

Wednesday, June 5th:

  • U.K. GDP (M-o-M):

The U.K. GDP is forecasted to come in at 0%, down from the previous month’s figure of 0.4%. This indicates a stagnation in economic growth. Weak economic data from the U.K. can lead to expectations of dovish monetary policy from the Bank of England, which could be supportive for gold and silver as investors seek safe-haven assets amid economic uncertainty.

  • U.S. CPI: 

Core CPI (excluding food and energy prices) is forecasted to come in at 0.3% month-on-month, the same as the previous month. Year-on-year, Core CPI is expected to decrease slightly to 3.5% from 3.6%. 

Headline CPI, which includes all items, is forecasted to come in at 0.1% month-on-month, down from 0.3%, and 3.4% year-on-year, in line with the previous month’s figure. 

 Lower CPI readings can reduce expectations of holding rates steady and increase expectations of rate cuts. This supports gold and silver as lower rates decrease the opportunity cost of holding non-yielding assets.

  • FED Interest Rate Decision:

The FED is expected to keep interest rates unchanged at 5.5%. Last week, the ECB lowered rates, indicating a more accommodative stance. If the FED hints at future rate cuts, it could be supportive for gold and silver prices as lower interest rates tend to weaken the dollar and reduce the opportunity cost of holding precious metals.

Thursday, June 6th:

  • U.S. PPI: 

Core PPI, which excludes food and energy prices, is expected to come in at 0.3% month-on-month, down from 0.5%. Year-on-year, Core PPI is expected to decrease slightly to 2.3% from 2.4%. Headline PPI is expected to come in at 0.1% month-on-month, down from 0.5%, and 2.2% year-on-year, in line with the previous month’s figures.

PPI measures the average change over time in the selling prices received by domestic producers for their output. Lower PPI figures suggest decreasing inflationary pressures, which could lead to expectations of a more dovish monetary policy stance from the FED, potentially boosting gold and silver prices.

  • U.S. Initial Jobless Claims:

Initial jobless claims are expected to come in at 222,000, down from the previous week’s 229,000. A lower-than-expected number of claims indicates a strong labor market, which could weigh on gold and silver prices as it may support a higher interest rate environment. Conversely, higher-than-expected claims could signal economic weakness, boosting the appeal of safe-haven assets like gold and silver.

Friday, June 7th:

  • FED Monetary Policy Report:

The FED’s monetary policy report will provide a comprehensive overview of economic conditions and the outlook for monetary policy. It typically includes analysis of inflation, employment, and economic growth. Investors will be looking for any indications of future policy direction. Dovish signals in the report could support gold and silver prices, while a more hawkish tone could pressure them.

Central Bank Speak: 

  • ECB Speakers:

Multiple ECB members are scheduled to speak, likely providing insights into why the ECB decided to cut rates last week. Dovish commentary from ECB officials can weaken the euro, potentially supporting gold and silver prices in euro terms. Conversely, if they indicate that further cuts are unlikely, it could strengthen the euro and weigh on precious metals.

  • FED and U.S. Treasury Speakers:

Limited FED speak this week includes Treasury Secretary Yellen and FOMC Member Williams. Any dovish remarks from these officials, indicating a pause or cut in rates, could be supportive for gold and silver prices.

Conclusion:

This week’s mix of GDP data, inflation figures, and central bank speeches will provide crucial 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, signs of economic strength 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.