Gold and Silver Eye Weekly Gains Amid Dovish Fed Speech

APMEX

8/27/2021 10:48:22 AM

For most of the week, investors were weighing risk stemming from a continued rise in Delta variant cases, and chaos in the Middle East. Tension abounded on Wall Street at the beginning of the week, as some experts identified complications from Delta spread as a threat to economic growth.  

Gold started the week at around the $1,778 level, while silver started the week at just over $23 an ounce. Despite disappointing manufacturing and services data, U.S. stocks were broadly higher as the week began. Boosted by FDA approval of the Pfizer Covid vaccine, the S&P 500 closed near record levels, while the Nasdaq reached a new closing high on Monday.

Early in the week, the dollar was plagued by rumors that the taper timeline could be delayed by weak U.S. economic data. The dollar index was coming off of a nine-month high last week, as the odds seemed to favor a quicker taper timeline. Metals would gain on the dollar slide. By Tuesday, silver had risen by nearly 4%, reaching its weekly peak of $23.94. Gold had gained 1.7%, reaching its weekly high of $1,809 on the same day.

With little in terms of scheduled economic events and more questions regarding monetary policy, investors eyed the Fed’s Jackson Hole Symposium later in the week. The dollar gained momentum mid-week, along with Treasury yields, which would pressure bullion.

Thursday would see gold lows around $1,782 and a modest silver dip to $23.44. Equities fell on Thursday amid accounts of more violence in Kabul, Afghanistan. Reports followed that confirmed multiple bombings had occurred at and near the airport, resulting in the deaths of over 150 people, including 13 U.S. troops.  By the end of the day, the dollar was slightly up while the Nasdaq and S&P 500 had fallen by 0.6%.

The NYSE held a moment of silence on Friday morning, to pay respect to the U.S. personnel and Afghans who lost their lives in yesterday’s attacks.  Stocks opened slightly higher Friday morning, as the focus was on Fed Chair Jerome Powell’s address. Powell highlighted an “uneven” recovery, citing a shift in spending from services to goods, fueling inflation.

Powell confirmed that asset purchases will continue until the economy reaches “maximum employment and price stability goals.” No firm timeline was given for tapering. However, Powell indicated that tapering is likely occur before the end of the year. There are three Fed meetings remaining in 2021, in which this could be announced. He also mentioned that a taper in asset purchases won’t necessarily be followed by interest rate increases.

Stocks had a bullish reaction to a seemingly dovish speech, with the S&P 500 reaching all-time highs, and other major indices trading higher as well. Treasury yields dipped, while Gold rose to $1,805. Silver saw an uptick as well and is currently hovering near $23.88. Both metals are likely going to post gains for this week. Silver is set for the best week since May, up by 3.3%. Gold is eyeing a 1.3% rise.