Gold & Silver Battle USD Strength Ahead of Inflation News

APMEX

9/13/2021 11:12:27 AM

Gold and Silver Fight USD Strength Ahead of Inflation Reports

Last week saw a decline for both gold and silver, while stocks were lower. The dollar was higher, as some indicators pointed to slowdowns in the U.S. economy. Gold gained some momentum this morning from weaker U.S. bond yields. However, gains were capped by dollar strength, putting gold at $1,794. The dollar also weighed on silver prices this morning. Silver briefly dipped by 1.5% but is now back up to around $23.79.

On the crypto front, Bitcoin and other cryptocurrencies are seeing more selling after the U.S. Securities and Exchange Commission (SEC) hinted at crackdowns and blocked Coinbase from launching a service in which users could earn interest while holding Bitcoin. As of now, Bitcoin is down by more than 16% from one week ago. 

U.S. equities are attempting a rebound after five days of losses. The S&P 500 and Dow both opened slightly higher. With U.S. economic recovery being a top consideration, there are several scheduled economic events this week that may help shape investor sentiment. 

On Tuesday, we will see U.S. inflation data for August. Both the Consumer Price Index and U.S. Core Price Index are forecasted to have slightly decreased from last month, by about 0.1% each. Higher readings in ether index would lend more credence to those who disagree with the Fed’s assessment that current inflation rates are transitory in nature. Either way, investors and consumers all feel the effects of higher costs, with real inflation rates well above a “healthy” rate near 2%. 

On Thursday, we see retail sales data for the U.S. Sales are predicted to have increased but remain in negative territory. Consumer sentiment data is also set to be released on Friday. Collectively, this week’s data is expected to paint a better picture for next week’s Fed meeting. 

While there is a mixture of hawkish and dovish leanings amid Fed officials, it seems unlikely economic data from this week would convince the Fed to delay its tapering timeline to next year. Investors hope to gain insight on when tapering should begin, and if it is still supposed to occur before the end of this year. However, a more dovish Fed could be supportive of bullion. 

Regardless, the key events are Tuesday’s inflation readings, and next week’s Fed meeting. Hard assets and safe havens are unlikely to lose favor this week, while concerns persist over a slowdown in the global economy. Last week, the dollar maintained favor as the preferred safe haven asset, which pressured gold and silver prices. We will see if the same is true for this week.