Gold and Silver Steady Ahead of Key Economic Reports

 

Gold and Silver Steady Ahead of Key Economic Reports

(Bullion News Network) – Gold and silver prices moved little today as markets braced for several key economic reports slated for release on Thursday and Friday. The two metals moved in lock step, with gold losing a few dollars as silver slid marginally during one of the most stable days in weeks for the precious metals market. Traders are now eyeing tomorrow’s initial jobless claims report, as well as a Personal Consumption Expenditures (PCE) and consumer sentiment report scheduled for release Friday morning. These reports will give the Federal Reserve fresh data to analyze as the FOMC prepares for a pivotal May meeting following its decision to leave interest rates unchanged last Wednesday. 

These three data reports come on the heels of another no-cut decision from the Federal Reserve, so traders should expect volatility as markets attempt to interpret how the data will play into the Fed’s next decision. Speaking to reporters following the FOMC’s interest rate decision last Wednesday, Federal Reserve Chair Jerome Powell emphasized that the Fed is prepared to resume cutting interest rates if inflation falls more quickly than anticipated or if the labor market weakens unexpectedly: 

As the economy evolves, we will adjust our policy stance in a manner that best promotes our maximum employment and price stability goals. If the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly. 

Mr. Powell’s comments underscore the stakes for this busy week of economic data, beginning with tomorrow’s initial jobless claims report. The median projection currently anticipates a minor increase in initial jobless claims from 223,000 to 226,000. A significantly larger jump in jobless claims could make a strong case for the Fed to take action, especially considering recent evidence that the labor market could be cooling down at the beginning of the year. Investors should expect demand for safe haven assets like gold and silver to potentially jump if tomorrow’s jobless claims report reveals more cracks in the U.S. job market. 

The most important economic report will come on Friday morning when the Bureau of Economic Analysis releases Personal Consumption Expenditures (PCE) data for the month of February. January’s PCE matched forecasts, and analysts expect the PCE, year-over-year PCE, and core PCE to remain unchanged at 0.3%, 2.5%, and 0.3%, respectively. Forecasters say the year-over-year PCE is set to increase by 0.1% from 2.6% to 2.7%. The PCE is one of the Federal Reserve’s preferred measures of inflation, so an unexpected drop in inflation could incentivize the Fed to act quickly to cut rates. 

Friday’s consumer sentiment reading could also impact action in the precious metals market. Today, researchers found that consumer confidence has dropped to a four-year low as Americans fret about the potentially inflationary impact of President Trump’s tariffs. Forecasters expect the final consumer sentiment rating for March to remain unchanged at 57.9%, but a large drop could spur more demand for safe haven assets, including gold and silver. 

Gold and silver prices moved little today ahead of the news, with most traders opting to wait and see what these reports reveal about the economic situation in the United States. Price action could be tethered to the implied probability that the Fed will move to cut rates. As of market close on Wednesday, CME FedWatch projects a 13.6% likelihood that the FOMC will vote to cut rates by 25 basis points, down from 26.7% one month ago and 18.7% last week.