Gold & Silver See Weekly Gains Despite Yield, Dollar Spikes

APMEX

4/14/2022 4:19:12 PM

As a reminder, OneGold offices will be closed tomorrow, April 15th in Observance of the Good Friday Holiday. Major markets such as the New York Stock Exchange are also closed on Friday. Throughout the shortened trading week, investors remained focused on Fed policy amid soaring inflation, the Russia-Ukraine conflict, and the start of corporate earnings releases. 

The economic calendar was riddled with potential market-moving events throughout the week, with Fed inflation projections on Monday and CPI data on Tuesday. Thursday was reserved for jobless claims along with consumer sentiment and retail sales data. 

Adding to last week’s losses, stocks in the U.S. started lower on Monday, while fresh inflation data loomed. Of the three major indices, the Nasdaq lost the most at 2.1%. Meanwhile, the 10-year Treasury yield breached 2.79%, which would be its highest in three years. Despite the yield spike, gold and silver rose slightly, ending the day near $1,969 and $25.35, respectively. 

On Tuesday, CPI data revealed that U.S. inflation had risen by 8.5% year-over-year in March. This marked the steepest consumer price hike since 1981. Following the news, U.S. equities were lower while Treasury yields retreated from record highs. At the same time, bullion rose. Gold touched one-month highs near $1,980, while silver reached $25.60 an ounce. 

Higher inflation coupled with geopolitical uncertainty has supported gold and silver gains for two consecutive weeks. This has been reflected in investor sentiment, as data from the World Gold Council revealed an inflow of $11.8 billion into gold ETFs for March of 2022. This marked the most in terms of dollar inflows to gold ETFs since February of 2016. 

Stocks rallied Wednesday, amid positive corporate earnings data largely led by travel shares. Riskier assets such as cryptocurrencies were also higher on Wednesday. The two largest cryptocurrencies in Ethereum and Bitcoin were higher, following Bitcoin’s earlier drop below $40,000 earlier in the week. 

Thursday saw a rise in jobless claims of 185,000 against the 171,000 that was forecasted. Retail sales rose 0.5% from March, which was slightly lower than the 0.6% estimate. Retail sales in the U.S. were led by gasoline purchases. Mixed earnings data and inflation worries contributed to another daily downturn in U.S. equities on Thursday. 

Currently, the S&P 500 is eying a weekly drop of 2.1% while the Nasdaq is down by over 3%. Multi-decade inflation is contributing to the concern of many that the Fed will pursue an even more hawkish policy with higher-than-expected interest rate hikes. This, coupled with higher Treasury yields and a stronger dollar, has weighed on gold prices.  This, coupled with higher Treasury yields and a stronger dollar have all weighed on gold prices. 

Despite gold’s headwinds, its appeal as a safe-haven asset amid inflation woes and war have kept prices buoyed this week as metals eye two consecutive weeks of gains. Currently, gold is 1.4% higher for the week at $1,972 an ounce. Silver is 3.3% higher at $25.58.