Gold and Silver Barely Up As Oil Tops $100 Per Barrel

 

Gold and Silver Barely Up as Price of Oil Tops $100/Barrel

(Bullion News Network) – Precious metal prices moved marginally higher on Monday as oil prices continued to climb amid the ongoing war in Iran. The spot price of gold increased on Monday by just over $20 per troy ounce. Silver fared a bit better, with the spot price of silver adding approximately $0.40/ozt to remain above $70 per troy ounce. The price action favored silver, driving the gold-silver ratio more than 0.5% lower to around 64.43:1. Platinum-group metals saw more movement, with the spot price of platinum adding over $23/ozt and palladium’s spot price gaining more than $30 per troy ounce. The ongoing war in Iran remained a major story on Monday. The price of crude oil topped $105 per barrel by market close on Monday, bringing its total year-to-date gains to more than 83%. The closure of the Strait of Hormuz by Iran remained the main factor behind rising oil prices, and a lack of substantive peace talks between the U.S., Iran, and Israel kept markets skittish to begin the week.

Wall Street responded to the growing quagmire in the Middle East with a mixed bag on Monday. The S&P 500 and Nasdaq pulled back, while the Dow Jones composite eked out a minor gain as Jerome Powell’s speech struck an optimistic tone. During a speech on Monday, the Federal Reserve Chair told investors that he does not see a need to hike interest rates in response to rising oil prices. Instead, Powell said that the Fed is positioned to “wait and see” as the war and its impact on consumer prices develop. Interest rate futures adjusted accordingly. CME FedWatch’s projection showed a 2.6% probability on Monday that the FOMC will vote to raise rates at its April meeting. This projection is down from 4.1% on Friday and 6.2% one week ago. Powell’s speech helped the Dow to regain a bit of momentum, eking out a minor win to start the trading week.

On Monday, U.S. President Donald Trump renewed his threat to destroy Iranian energy plants if the country fails to reach a peace deal with the United States. The American leader made a similar threat earlier this month, but he extended the deadline for action after claiming Tehran had come to the negotiating table. Trump claimed on Monday that progress was being made in peace talks between the U.S. and Iran but warned the country that failing to strike a deal would lead to further escalation. Oil prices jumped on the renewed threat, and the uncertainty may have given safe haven assets like gold and silver a marginal boost toward the end of the trading day. A US-backed peace plan was rejected by Iran earlier this month. The proposal would have required Iran to end its nuclear program and relinquish some control of the Strait of Hormuz to the United States, among other concessions. Tehran responded with its own plan, asking that the U.S. withdraw forces, allow Iran full autonomy over the vital Strait, and pay reparations for the conflict. Iranian officials claim that the country has not been in active peace talks with the United States.

The March U.S. employment report is scheduled for release on Friday and could offer more insight into the strength of the U.S. economy as the war in Iran continues. Per Powell’s signal, a rate hike at the FOMC’s April meeting seems unlikely. However, a surprise in this report could impact the value of gold and silver, both of which tend to thrive in uncertain environments. The median projection anticipates 59,000 jobs added, up from a deficit of 92,000 jobs in the dour February report. The unemployment rate is expected to remain unchanged at 4.4%. Next week, a fresh Personal Consumption Expenditures (PCE) report will give investors and the FOMC more insight into where inflation figures are heading.

Gold and silver logged marginal gains on Friday as oil prices continued to rise. War between the United States and Iran led to the closing of the Strait of Hormuz, a vital chokepoint for crude oil coming out of the Middle East. Iran has shown reluctance dealing with U.S. President Donald Trump, who has repeatedly called for Iran to open the waterway back up. The conflict is likely to remain a major focus for all markets, including the precious metals market, throughout the week. Speeches from multiple Federal Reserve officials are also scheduled this week. Powell told reporters on Monday that the FOMC should feel no rush to hike interest rates amid climbing oil prices, and commentary from other central bank leaders should further contextualize the Fed’s position heading into its April meeting.