Gold Rises Steadily While Stocks Ease

APMEX

7/16/2021 11:23:23 AM

Gold Rises Steadily While Stocks Relax

Bullion markets were steady this week, bolstered by Fed speak and easing yields. As the week started, the focus was on quarterly earnings from major corporations, inflation data, and Fed Chair Jerome Powell’s testimony before The U.S. House Financial Services Committee.

 U.S. stocks started the week off on solid footing, as the Dow Jones Industrial Average surged 120 points, reaching a record close. The S&P 500 and Nasdaq both jumped as well, as optimism permeated Wall Street ahead of the highly anticipated earnings reports. 

 Gold would touch its weekly low of $1,792 on Monday while stocks surged. Silver also saw its weekly low on Monday, near $25.88 an ounce. Both metals would trend upward from there, as Tuesday’s release of inflation data revealed a 5.4% year-over-year increase in prices. This would mark the largest monthly inflation increase since 2008.

 The higher-than-expected inflation number dampened the mood on Wall Street, as major indices slid lower. Yields saw an uptick following inflation data, as the 30-year Treasury note rose to about 2.04%. Silver reached a Tuesday high of $26.34, up 1.7% from its Monday lows, while gold hovered around $1,810.

 In remarks before Congress on Wednesday, Fed Chair Jerome Powell noted that the U.S. economy would need to show significant improvement before changes would be made in monetary policy, but officials are discussing a reduction of asset purchases.

 Powell also stated that inflation has “increased notably” and would likely remain elevated in coming months. He maintained the stance that current inflation is transitory in nature, citing supply shortages in the automotive industry as one example.

 Wednesday saw a decrease in real yields, and subsequent surge for gold prices. Gold jumped 1%. The yellow metal would end Wednesday around $1,825. The same factors also boosted silver prices. The downturn in yields pressured the dollar, allowing silver to surge to a weekly high of $26.44 on Wednesday.

 It wasn’t a great week in the cryptocurrency space, as the Fed Chair spoke favorably of crackdowns in the stablecoin market, and the co-creator of Dogecoin labeled cryptocurrencies, “shady business.” So far, Bitcoin is down by 6.4% this week.

 Gold momentum slowed Friday morning, but a softer dollar was supportive of bullion prices. Currently gold is at $1,823, which would be a weekly gain of 1.2%. Right now, silver is hovering just above the $26 level which if maintained, would leave silver with little weekly change.

 Overall, both gold and silver had support from a variety of factors throughout this week. It seems investors were calmed somewhat by Fed Chair Jerome Powell’s remarks regarding inflation. It also seems that tapering could occur sometime before the end of 2022. For this week, that meant that stocks retreated from recent highs, and Treasury yields would continue their downward slide. That being so, gold will likely notch its fourth consecutive weekly rise.