Gold and Silver Prices Climb to Open Week

 

Gold and Silver Climb to Open Trading Week

(Bullion News Network) – Gold and silver prices climbed on Monday, extending Friday’s gains for both metals. The spot price of gold added over $94 per troy ounce, reclaiming a bit of price action above $5,000 per ounce and settling at approximately $5,076/ozt. Silver prices also increased, with the precious metal outpacing gold’s Monday performance to add over $5/ozt and cross $83.50 per troy ounce. The price action favored silver, driving the gold-silver ratio nearly 3 points lower to approximately 60.66:1. Platinum-group metals saw a calmer trading day, with the spot price of palladium outpacing platinum to add around $41.64/ozt compared to platinum’s $22.68 per troy ounce.

Interest rate speculation continued to play a role in safe haven asset demand throughout the beginning of February. Market confidence in a March rate cut jumped last week after job openings dropped in December and January’s initial jobless claims climbed sharply. According to some analysts, this data suggests that the U.S. labor market may be continuing to cool, a trend that could cause the FOMC to cut rates in order to incentivize hiring. The Fed is still highly sensitive to inflation, however, so committee members will likely need to see more progress toward the FOMC’s longstanding 2% inflation target before market expectations flip firmly in favor of a March interest rate cut.

CME FedWatch currently projects a 17.7% probability that the FOMC opts to cut interest rates at its March 31 meeting; this projection is up from 10.4% one week ago but down from the Jan. 9 probability of 27.6%. Market bets on a rate cut are likely to fluctuate throughout this week, depending on two vital economic reports slated for release. On Wednesday, traders will be able to review the January U.S. employment report. Given last week’s troubling jobless claims data, markets are likely to pay especially close attention to the unemployment rate, as well as jobs added. After another jobless claims report on Thursday, Friday will see the release of the January Consumer Price Index (CPI), one of the Fed’s preferred measures of inflation.

Speeches from several Federal Reserve officials are also scheduled for throughout the week, which should give traders a bit more insight into how the FOMC feels about available economic data. Secretary of the Treasury Scott Bessent commented on gold’s wild price swings last week during an interview with Fox News. According to Bessent, exceptional speculation and ‘unruly’ trading in China are behind gold’s recent volatility.

The gold move thing – things have gotten a little unruly in China […] So gold looks to me kind of like a classical, speculative blowoff.”

Rising precious metal prices caused a significant strain in the United States market, particularly on the retail side of things. Volatility spikes at the beginning of February drove record demand, causing some dealers to delay shipments or institute minimum order values. Gold and silver prices saw their largest single-day drops in years on Jan. 30, with silver shedding more than 23% in just one day following U.S. President Donald Trump’s announcement that Wall Street loyalist and former Fed governor Kevin Warsh will be nominated to succeed Jerome Powell as Chair of the Federal Reserve. Warsh’s reputation as an ally of Wall Street and opposition to large asset acquisitions by the Central Bank make him likely to push back on Trump’s repeated urgings to cut interest rates, according to some analysts. Precious metal prices fell dramatically on the news.

Warsh’s path to confirmation in the Senate remains an ongoing story, however. GOP Senator Thom Tillis vowed to block any nominee to the Fed Chair position until the Department of Justice resolves its investigation into Jerome Powell, who will occupy the Fed Chair role until his term ends in May. Tillis reiterated this promise following Trump’s announcement of Warsh’s nomination, although the Republican senator specified that he otherwise approves of Warsh’s qualifications for the role. Tillis is a member of the Senate Banking Committee, which is held by a narrow Republican majority of 13-11. If Tillis votes no, it would create a deadlock, preventing Tillis’ nomination from receiving a larger vote in the Senate.

The controversy surrounding Warsh’s confirmation as Fed Chair could continue to drive demand for safe haven assets, as a deadlocked nomination process may undercut the nomination’s mitigation of concerns about the future independence of the Federal Reserve. This story is ongoing. The Department of Justice has not yet suggested that the investigation into Powell, which Powell and Tillis criticized as being part of a large campaign to pressure the economist into cutting interest rates, is near resolution.

As the week continues, news about the Kevin Warsh confirmation process and various economic reports should both play outsized roles in driving demand for gold, silver, and other safe haven assets.