12/08/2024: The Week Ahead in Gold & Silver Markets

12/08/2024: The Week Ahead in Gold & Silver Markets

Last Week’s Price Action

Gold closed the week 0.46% lower at 2,431$ per ounce.
Silver closed the week 3.88% lower at 27.45$ per ounce.

The Week Ahead

As we step into a new trading week, the focus of gold and silver investors is firmly on the upcoming economic reports, central bank meetings, and global events that could influence the trajectory of precious metals. Let’s explore the key factors likely to drive market sentiment and impact gold and silver prices in the days ahead:

Tuesday. August 13th:

  • U.S. Producer Price Index (PPI)

Forecast to increase by 0.2% month-on-month, down from the previous 0.4%. A lower PPI could suggest easing inflation pressures, potentially supporting gold and silver by bolstering the case for a more dovish Fed stance. Conversely, a higher-than-expected PPI might signal rising inflation, which could lead to tighter monetary policy and pressure on precious metals.

  • FOMC Member Bostic Speaks

Bostic’s speech will provide insights into the Fed’s future policy direction. Dovish remarks could be positive for gold and silver by suggesting possible rate cuts, which would make precious metals more attractive compared to interest-bearing assets. Economically, a more dovish stance could signal concerns about slower growth or weaker inflation. On the other hand, hawkish comments may indicate the Fed’s intention to raise rates to curb inflation, which could strengthen the dollar and potentially slow down economic activity by making borrowing more expensive.“If the Federal Reserve begins cutting rates, potentially as early as next month, interest rate-sensitive investors may return to gold via ETFs.”

Wednesday: August 12th

  • UK Consumer Price Index (CPI)

Forecast to rise to 2.3% year-on-year, up from the previous 0.1%. A significant increase in CPI would signal stronger inflationary pressures in the UK, potentially leading to expectations of tighter monetary policy from the Bank of England. This could bolster the British pound and put downward pressure on gold and silver. Economically, higher inflation might reduce consumer purchasing power and prompt the BoE to consider raising interest rates to manage inflation. Conversely, a lower-than-expected CPI could suggest weaker inflation, which might support gold and silver as investors seek safety amid economic uncertainties.

  • U.S. Consumer Price Index (CPI)

Expected to increase by 0.2% month-on-month, a turnaround from the previous -0.1%. This rise could indicate a rebound in inflationary pressures, which might lead the Federal Reserve to consider tighter monetary policy. This could strengthen the U.S. dollar, placing downward pressure on gold and silver. Economically, a higher CPI may suggest rising consumer costs and could influence the Fed’s stance on interest rates. Conversely, if the CPI comes in below expectations, it could signal persistent low inflation, potentially supporting gold and silver as investors seek stability amidst uncertain economic conditions.

Thursday, August 13th

  • UK GDP

Forecast to rise by 0.1%, down from the previous 0.4%. A slower GDP growth rate could signal weakening economic momentum in the UK. This might lead to expectations of more accommodative monetary policy from the Bank of England, which could pressure the British pound and potentially support gold and silver prices as investors seek safe havens.

  • U.S. Retail Sales 

Expected to increase by 0.4%, a rebound from the previous 0%. Strong retail sales would indicate robust consumer spending, potentially supporting economic growth and the U.S. dollar, which might weigh on gold and silver prices. Conversely, a lower-than-expected reading could suggest weaker consumer demand, which might boost gold and silver as a safe-haven response.

  • U.S. Initial Jobless Claims

Forecasted at 235,000, slightly up from the previous 233,000. An increase in jobless claims could suggest a weakening labour market, potentially supporting gold and silver as investors seek safety. However, if claims come in lower than expected, it could indicate a strong job market, which might exert downward pressure on precious metals.

Friday, August 14th

  • UK Retail Sales 

Forecast to increase by 0.6%, rebounding from the previous -1.2%. A stronger-than-expected retail sales figure would suggest improved consumer spending in the UK, potentially supporting economic growth and the British pound. This could put downward pressure on gold and silver prices as a stronger pound reduces their appeal in GBP terms. Conversely, a lower-than-expected retail sales figure might signal ongoing consumer weakness, which could lead to expectations of more supportive monetary policy from the Bank of England, potentially boosting gold and silver.

Gold and silver prices may be shaped by central bank actions, economic data, and inflationary pressures. Changes in these areas could lead to market fluctuations and impact precious metals.

Be sure to check out our “This Week in Gold” update on Friday, where we’ll provide a detailed review of the week’s events and their effects on the gold and silver markets