Gold and Silver Slide As Wall Street Shows Signs of Life

 

Gold, Silver Slide As Wall Street Shows Signs of Life

(Bullion News Network) – Gold prices slid on Friday, notching the metal’s third loss of the week following a record-breaking performance on Tuesday. The precious metal is set to close the day down around $30 per troy ounce, bringing its total weekly losses to over $100/ozt. A combination of profit-taking and stronger performances on Wall Street seems to be motivating the slide. Gold prices dropped on Wednesday after U.S. President Donald Trump suggested that his tariffs on Chinese goods, some of the largest in history, may go “down substantially.” Wall Street soared on the news, as well as Trump’s further suggestion that he does not plan to fire Federal Reserve Chair Jerome Powell, a controversial suggestion the leader floated on Truth Social earlier this week. Both the prospect of a prolonged legal battle over the independence of the central bank and mounting fears that the ongoing trade war with China will lead to a U.S. recession drove safe haven assets sharply higher to start the week. 

Silver prices also declined on Friday, shedding $0.42 per troy ounce but securing a gain on the week. Silver prices jumped on Wednesday, decoupling from gold in a move that drove the gold-silver ratio sharply lower. The GSR peaked at a nearly five-year high of 104.78:1 on Monday as gold secured its latest all-time high, but Wednesday’s retraction pulled the ratio down to just under 98:1. Today’s price action favored gold, pushing the gold-silver ratio above 100:1 once again to conclude the trading week. On a larger timeline, the past month has been highly volatile for the gold-silver ratio. Between March 25th and today, the ratio has jumped by more than ten points.

On Wall Street, the news that Trump may be willing to negotiate further with China has led to a week-long surge. The S&P 500 logged gains for the fourth day in a row in a winning streak that began with Trump’s comments on Tuesday. Despite the revelry on Wall Street, an actual deal with China may be further away than American investors hope. Chinese officials rejected President Trump’s claim that he had begun negotiations with President Xi, casting doubt on whether or not a de-escalation of the ongoing trade war is on the horizon. China did take steps to exempt certain American goods from its retaliatory tariffs, but it is unclear at this point how close the two world’s largest economies are to securing a lasting trade deal.

CNN’s Fear and Greed Index clocks a reading of 35, suggesting that the market is currently motivated by “fear.” This is up from 19 one week ago, which was before Trump suggested that a trade deal with China could be coming soon. The most recent consumer sentiment reading suggests that Americans are increasingly concerned about what President Trump’s aggressive trade policies could mean for consumer prices and the economy. Consumer sentiment dropped 8% in April, securing the largest three-month decline in the metric since 1990.

Interest rates remain in focus for investors heading into May. The FOMC will meet on May 7th to vote on whether to cut interest rates. CME FedWatch projects only a 9.2% probability that the Fed will vote to ease monetary policy with a 25 basis point interest rate cut. Next week, traders – and the Fed – will have access to a full slate of economic data reports that could provide more insight into the current state of the U.S. economy. A consumer confidence report for April will become public on Tuesday. On Wednesday, GDP and Personal Consumption Expenditures (PCE) data will be released. The PCE report should be particularly insightful for traders looking to lock in their bets on how the FOMC will vote at its early-May meeting. To end the week, Friday will feature non-farm payrolls, the April U.S. unemployment rate, and an hourly wages report.

Gold is set to end the week down nearly $100 per troy ounce. Silver will close the week up by over $0.50/ozt. The gold-silver ratio will close Friday evening at just over 100:1.