Precious Metals Hold Steady Amid Record Inflation

APMEX

2/11/2022 10:52:02 AM

Volatility plagued Wall Street as the trading week began with continued rollouts of quarterly earnings reports. Major indices whipsawed on Monday but would end the day lower. Gold started the week near $1,809, and would reach $1,823 by Monday’s close, as investors awaited inflation data. Silver also saw gains on Monday, as the metal jumped 2.1% while the Dollar dropped against the Euro.

Quarterly earnings continued to roll in on Tuesday. This time, stocks were driven to the upside with The Dow and Nasdaq both gaining just over 1%. The mood on Wall Street was still anxious, as investors anticipated Thursday’s CPI data. 

Many were looking to this data for hints as to how the Federal Reserve may react in the face of red-hot inflation. Meanwhile, gold and silver saw modest gains on Tuesday, reaching their respective daily peaks of $1,828 and $23.35. U.S. stocks rallied for the second straight day on Wednesday, largely led by tech shares. 

Bitcoin dropped below $44,000 on Wednesday, after a four-day wining streak. Crypto prices continue to see pressure, as the Biden administration recently warned of an executive order that would attempt to regulate cryptocurrencies as, “a matter of national security.”

Thursday came, and with it the much-anticipated inflation data. The news was even worse than forecasts, as annual inflation surged to 7.5%. This marked the biggest jump in prices since 1982. Following the inflation news, stocks retreated while bullion held steady. 

Forty-year high inflation drove some investors to believe that the Federal Reserve may act more aggressively in an attempt to combat record price increases. As a result, the Dow dropped over 600 points, while the S&P 500 and Nasdaq slid 1.7% and 2.1% respectively. 

At the same time, the 10-year Treasury yield breached 2% for the first time since 2019. The Dollar also fell on the heels of Thursday’s inflation news, providing support for bullion. As a result, gold reached two-week highs near $1,841 while silver touched its weekly high of $23.70. 

Gold and silver moved slightly lower this morning as the 10-year Treasury yield remained near two-year highs. Stocks in the U.S. were mixed as of this morning, while investors continued to digest Thursday’s inflation news. Some major indices may see weekly gains, even after a volatile week driven by earnings and inflation data.

Today, gold recovered to around $1,835, which is 1.4% higher for the week. Silver is currently near $23.25, which would be 2.8% higher on the week. Both metals seem to have a reasonable amount of support despite higher Treasury yields, as the Dollar softens and investors hedge against record inflation.