Gold and Silver Retreat as U.S. Uncertainty Calms

 

Gold and Silver Retreat as U.S. Uncertainty Calms

(Bullion News Network) – Gold pulled back today, logging its third consecutive gain to end this week in the red. The spot price of gold retreated by over $31 per troy ounce, bringing the precious metal down nearly $100/ozt from its Tuesday high of $3,431.46/ozt. Silver logged a more dramatic swing, dropping by over $0.80 per troy ounce to erase nearly all of this week’s gains. The spot price of silver peaked on Tuesday at $39.30 per troy ounce, the highest silver price since 2011. The precious metal is set to end the week at just over $38.25/ozt. Silver remains considerably up on the month; silver closed a bit over $2 lower on June 25th at $36.27/ozt. The price action heavily favored gold, driving the gold-silver ratio 1.12:1 higher to 87.22:1, which is 0.55:1 lower than last Friday’s close.

Driving Friday’s pullback in the precious metals market is likely a drop in uncertainty and, by extension, safe haven demand. The stock market surged on the day, with the Dow, Nasdaq, and S&P 500 all notching gains. The S&P 500 logged its fourth consecutive record today following a favorable earnings report from Google. CNN’s Fear and Greed Index indicates that markets are being motivated primarily by greed, with market momentum and stock price strength sitting near recent highs. Safe haven demand, as measured by the difference between stock and bond returns over the course of 20 days, remains low compared to April’s dour readings. Despite more tremors earlier this week following a series of new tariff announcements from the White House, traders seem relatively unfazed. 

Meanwhile, the Trump administration has continued to put pressure on Jerome Powell, Chair of the Federal Reserve. Trump has criticized the economist throughout the year, advocating that he and the FOMC should vote to cut interest rates before it is “too late.” Powell seems unlikely to budge. CME FedWatch projects only a 2.6% probability that the Fed will vote to cut rates at its July meeting, which is scheduled for next Wednesday. This probability has declined throughout the month and is down from 4.1% on Thursday, 6.2% last week, and 24.8% at the end of June. Last week, Republicans in Congress ramped up their attacks on the central banker, accusing his department of overspending in its most recent Fed HQ renovations. Trump and Powell got into an argument yesterday during a visit to the Federal Reserve. President Trump claimed that an additional $400 million was added to the renovation budget; Powell argues that this $400 million refers to a separate building constructed five years ago. 

Wall Street appears uninterested in the uncertainty surrounding Powell’s role in the Fed, and it is unclear at this point whether the Trump administration will attempt to remove the economist from his post, which he was appointed to during Trump’s first term in office. At this point in time, Trump’s action against the Federal Reserve Chair appears relegated to posts on Truth Social in which the U.S. leader has repeatedly denigrated Powell for his committee’s decision to leave interest rates unchanged. 

Next week should be a busy one for traders. A fresh consumer confidence report for July is scheduled for release on Tuesday; analysts project confidence to jump three points from 93.0 to 96.0. On Wednesday, a fresh Q2 GDP reading will come out just hours before the FOMC releases its interest rate decision. Powell will deliver a press conference after the decision becomes public. On Thursday, traders will have the chance to review PCE inflation data, as well as employment cost data and the initial jobless claims report. A full U.S. employment report, the U.S. unemployment rate, and the final July consumer sentiment report will be available to end the week on Friday.

A pullback in uncertainty drove precious metal prices lower, with rising stock prices putting a sizable dent in safe haven demand. Gold prices pulled back, and silver took the biggest loss of the day. The gold-silver ratio increased to end the week.