Gold and Silver End Losing Streaks Amid a Dollar Pullback

APMEX

3/3/2023 2:49:41 PM

Last week, gold and silver slid lower for the fourth consecutive week amid dollar strength and rising Treasury yields. Currently, markets are forecasting about a 65% chance of a 0.25% interest rate hike at the next Fed policy meeting, on March 21-22. Rate hike fears, along with dollar index movements were catalysts for gold price movements throughout this week.

 Gold saw a slight uptick from $1,812 to $1,818 on Monday, as the dollar pulled back from a six-week high. However, uncertainty regarding interest rates capped further gains. On the same day, silver saw a slight divergence from gold, with a 0.74% daily decline to $20.61 an ounce.

 U.S. equities closed out a losing month on Tuesday, as the S&P 500 and Dow Jones Industrial Average shed the most with 2.6% and 4.2% respective monthly losses. Meanwhile, the Nasdaq Composite lost 1.1% in February.

 Gold managed to bounce from two-month lows on Tuesday, and would end the day higher, at $1,827. While a slowdown in the dollar rally was responsible for gold’s Tuesday gains, it was ultimately this and rate-hike fears that drove gold 5.2% lower in February, for its worst month in nearly two years. Silver also rose on Tuesday, but would end the month 11.8% lower, at $20.87.

 Consumer confidence data released on Tuesday showed a three-month low for the index that measures how regular Americans feel about the state of the U.S. economy. The index provided by the Conference Board slid to 102.9 in February, amid consumer concerns about persistent inflation and higher interest rates.

 Precious metals started the month off on positive footing when the dollar index slipped by 0.4% on Wednesday. As a result, gold ticked up by 0.5% to $1,837, while silver touched a weekly peak of $21.17. Further gains for the pair were limited by higher Treasury yields, as yields on the benchmark 10-year note breached 4% for the first time in nearly three months.

 Higher yields and gloomy economic data weighed on U.S. stocks throughout Wednesday, for a mixed close on Wall Street. Gold ignored rising Treasury yields and rose to $1,840 on Thursday, while silver fell below $21, driving the gold/silver ratio closer to 87 as the week drew to a close.

 This morning, data from the ISM Services Index showed expansion in business activities throughout the services sector in February, with a reading of 55.1%. For this index, anything above 50% is a positive sign. This, along with a Friday dip in Treasury yields paved the way for a winning week on Wall Street. Currently, all three major averages are on track for weekly gains of just over 1%.

 This morning, gold touched a two-week high of $1,848, with help from a Treasury yield and dollar pullback. If maintained, that would be a 1.9% weekly gain for the yellow metal and an end to its losing streak. As this is written, silver is eyeing a 1.6% weekly uptick, at $21.13 an ounce.