Gold & Silver Dip Amid Wall Street Rally

APMEX

7/23/2021 10:51:58 AM

Gold & Silver Drop Amid Wall Street Rally

Caution underscored Monday’s mood, with an uptick in global virus cases coupled with real concerns over economic progress in the U.S. Stocks tumbled as the week began, with concerns that rising coronavirus cases may impede economic growth.  On Monday, the Dow Jones Industrial Average fell by 700 points, marking its worst day since October. The S&P 500 and Nasdaq also slipped 1.5% and 1.2% respectively. 

Yields were not immune to the downturn either, as the 10-year Treasury yield touched a five-month low on Monday as well. Gold started the week off just above $1,815 and would dip to $1,795 on the same day. Silver started the week near $25.75 an ounce. 

The overall risk-off sentiment didn’t immediately shift, but gold gains were capped on Tuesday by a stronger dollar and yields that were gaining ground. Investors seemed to favor those assets, while remaining skeptical of economic recovery. Gold touched its weekly high of $1,823 on Tuesday, before consolidating closer to $1,809 in the afternoon.

A rising dollar also pressured silver, as prices reached a weekly low of $24.71 on Wednesday. Wall Street also rallied, as major indices gained traction amid higher-than-expected earnings from companies such as Johnon & Johnson and Coca-Cola. 

Yields also rallied, which pressured bullion even more. As stocks, yields, and the dollar surged, investors looked to Thursday’s monetary policy update from the European Central Bank (ECB) and U.S. jobless claims. The ECB affirmed a continuation of accommodative monetary policy, but updated guidance to reflect higher inflation levels. 

By Thursday, Wall Street had erased losses from Monday’s sharp downturn. Jobless claims were released on Thursday morning. A jump in jobless claims saw claims rise to 419,000, against the 360,000 number that was forecasted. This unexpected rise concerned many investors, but emotions were mixed as earnings data was largely positive.

Gold was hovering near a two-week low near $1,794 on Thursday afternoon, while silver would reach its weekly peak near $25.45. 

Stocks rallied once more Friday morning, as major indices set their sights on the fourth straight day of gains. Overall, market sentiment varied throughout the week. Wall Street would see its worst trading day of 2021 on Monday, only to erase loses and move closer to all-time highs. So far, the dollar seems to have been the benefactor, as the greenback is reaching highs not seen in more than 3 ½ months. 

It wasn’t a great week for gold or silver. The risk-off sentiment seemed to dent the appeal of silver, given its forecasted demand in industry. At the time of writing, silver is near $25.12 an ounce, which would be a weekly decline of 1.1%. Currently, gold is looking at a potential downturn of 0.9% for the week, as it hovers near the $1,799 mark. 

However, many investors are confident in gold as a shield against uncertainty, as speculative longs for the yellow metal remain near one-month highs, according to the Commodity Futures Trading Commission (CFTC).