Gold and Silver Gain on Heightened Safe Haven Appetite

 

Gold and Silver Gain on Heightened Safe Haven Appetite

(Bullion News Network) – Gold jumped again today, building on Friday’s gains and driving the spot price to over $3,375 per troy ounce. Silver added more than $0.40 per troy ounce to its spot price, pushing the gold-silver ratio lower to settle at around 90:1. Increased safe haven appetite is likely behind the move, analysts say. The market position on interest rate futures has flipped; CME FedWatch now projects a 93.9% probability that the Fed will vote to cut interest rates at its September meeting, up from 80.3% yesterday and 63.1% one week ago. An unexpectedly weak job report could also be playing a role in the jump in gold and silver prices. 

A worse-than-expected labor market report shocked markets last week. The Bureau of Labor Statistics found that only 73,000 new jobs had been created in July, sharply lower than a muted forecast of 100,000. U.S. President Donald Trump derided the BLS for the report, accusing Bureau of Labor Statistics Commissioner Erika McEntarfer of manipulating the employment data in order to undercut the economic achievements of his administration. Trump fired McEntarfer shortly after, a move that has drawn criticism from some economists. The unexpectedly weak labor report could provide the FOMC with the evidence it needs to cut rates in September, according to some analysts.

Wall Street surged on the jobs report and revised Fed expectations. The stock market celebration continued today, with the Dow Jones jumping 500 points and the S&P 500 and Nasdaq logging their best day since earlier this year in May. Gold and silver prices followed a similar trend, with both safe haven assets climbing as traders’ bets adjusted in favor of a much-anticipated Fed rate cut in September. Historically, gold has tended to climb during periods characterized by falling interest rates. In 2024, interest rate speculation played a major role in gold’s historic price run, which saw the precious metal secure several all-time highs throughout the year. An underwhelming July FOMC meeting last Wednesday drove safe haven assets sharply lower, as Fed Chair Powell seemed content with the committee’s “wait and see” approach to adjusting interest rates.

Now, a dour jobs report has revived expectations that the Federal Reserve could cut interest rates up to twice by the end of the year. This drove gold and silver prices sharply higher, with silver seeing a larger jump amid renewed rate cut expectations and heightened safe haven demand. The lopsided price action favored silver, sending the gold-silver ratio higher to over 90:1. Gold is now in the green on the week, up to just over $3,375/ozt Monday compared to $3,314 per troy ounce seven days ago. Silver is set to end Monday at a couple cents above $37.50 per troy ounce, down nearly $0.65/ozt compared to last Monday’s close.

Platinum also gained on Monday, adding over $11 per troy ounce to its spot price to cross $1,340/ozt. Palladium moved in the opposite direction, losing $5.30 per troy ounce and adding a bit more disparity between the two platinum group metals. 

Later this week, an initial jobless claims report may shed more light on the state of the U.S. labor market, which analysts believe may be cooling down. Forecasters believe that jobless claims will jump by around 3,000 compared to last week. A major deviation from this expectation could impact the Fed’s likelihood of cutting rates in September.