Gold and Silver See a Weekly Divergence, Monthly Gains

APMEX

3/31/2023 3:16:31 PM

Gold and silver notched their fourth consecutive weekly gain last week, amid safe-haven inflows and the prospect of a rate hike pause in the U.S. The pair started this week near $1,974 and $23.18, respectively as investors anticipated the latest round of inflation news and gauged risk associated with uncertainty in the banking sector.

 After having touched a yearly high near $2,010 last week, gold momentum slowed on Monday, along with safe-haven buying. Risk appetite on Wall Street was also higher, as a buyer had emerged for the majority of Silicon Valley Bank, in North-Carolina Based First Citizens Bank.  Bond yields jumped following the news, while U.S. equities were mixed.

 Gold rose by 0.8% on Tuesday, as the dollar retreated by 0.5%. The move came despite another jump in bond yields. The 2-year Treasury note touched a weekly high above 4.05%, as major stock market averages ended the day slightly lower.

 Riskier assets rallied on Wednesday, as banking sector concerns allayed. Bitcoin was among the beneficiaries of an increased risk appetite, rallying by more than 5% on Wednesday. Meanwhile, tech stocks led gains as the Nasdaq rose the most out of the three major averages, with a 1.9% daily uptick.

 On the same day, an unexpected rise in U.S. February home sales preceded dollar gains, which pressured bullion. Despite this, gold and silver saw little change on Wednesday, as the pair ended the day at $1,984 and $23.32, respectively.

 Stocks in the U.S. surged higher again on Thursday, extending gains from the previous session. With little on the economic calendar, investors anticipated Fridays inflation news, in part to gauge whether or not the Fed will pursue further rate hikes at the next policy meeting on May 2nd-3rd. 

 The Fed’s preferred inflation gauge in the personal consumption expenditure (PCE) index, rose 0.3% in February on a monthly basis. This data, which was released this morning, was largely in keeping with expectations and for some, meant that the Fed was more likely to ease the rate of rate hikes amid continued concerns over the banking sector.

 Gold rose to what would be a weekly peak of $1,988 following the news. Silver jumped by 1.2%, breaching the $24 mark for the first time in nearly two months. Stocks also rose following the release of today’s inflation news, as the Dow Jones Industrial Average, S&P 500, and Nasdaq all looked to secure weekly gains.

 Gold retraced its earlier gains and is currently near $1,969 an ounce. If maintained, this would be a slight weekly loss for the yellow metal, but a 7.4% monthly gain. Silver also retraced this morning’s gains but is currently on track for a 3.4% weekly gain and 14.7% monthly gain, at $23.97 an ounce.  Next week, investors will be eyeing employment data and any cues from the Fed pertaining to the next round of interest rate hikes.