Gold Pulls Back But Ends the Week Up; Silver Slides Further

 

Gold Pulls Back As Silver Slide Continues To End Week

(Bullion News Network) – Gold prices pulled back today, sliding about $20 per troy ounce in an apparent sell-off. The move comes on the heels of a lackluster Thursday and a major jump on Wednesday which drove the metal to a fresh all-time high above $3,050/ozt. Despite the pullback, gold remains up on the week and did not crash below the $3,000 support. Silver prices fell more sharply, tumbling for the third consecutive day and losing $0.50 per troy ounce. The price action drove the gold-silver ratio higher, pushing the ratio to a near one-month high at 91.34:1. 

Gold pushed past another all-time high on Wednesday as Federal Reserve Chair Jerome Powell spoke to reporters following the FOMC’s decision to keep the federal interest rate unchanged at 4.25-4.50%. Powell’s speech recognized and mirrored much of the uncertainty driving American markets, and the economist conceded that President Trump’s tariffs may lead to higher prices for American consumers. While a rate cut would have been a major boon for gold bulls, Powell’s suggestion that inflation may be harder to keep under control than the FOMC previously believed reignited calls for safe haven assets, including precious metals like gold. 

Wall Street rallied on Powell’s speech, where the economist also reiterated his belief that the economy remains healthy. The S&P 500 ended a 4-week losing streak in what Yahoo Finance calls the “latest volatile week” in America’s financial capital. Gold is still a preferred asset during times of extreme volatility and uncertainty, analysts say.

CNN’s Fear and Greed Index finds that markets are being driven by extreme fear, marking nearly an entire month below a rating of 25. Market volatility has pulled back consistently since hitting a months-long high on March 10th, according to the index. Safe haven demand as measured by the difference between 20-day stock and bond returns has retreated slightly but remains up considerably on the year, a data point which the Fear and Greed Index says indicates a greater fear motivation among traders. Today’s Fear and Greed rating is largely buoyed by junk bond demand, which has jumped into the “greed” range. 

The gold-silver ratio, which measures the number of ounces of silver required to match the value of a single ounce of gold, remains volatile but has increased each day since March 13th. The ratio currently sits at 91.34:1 after a string of losses in the silver market, the highest gold-silver ratio since February 28th of this year. Gold’s momentum remains a chief motivator of the climbing GSR; demand for gold remains near an all-time high. Gold’s high price could mean a structural hit to retail demand, though, which is something for traders to look out for. Reuters reports that premium discounts for gold in India hit an 8-month low this week as the precious metal cruised past yet another all-time high. 

Today’s price movement sets traders up for a busy week of important economic data reports culminating in the February Personal Consumption Expenditures (PCE) index scheduled for release next Friday. The PCE is one of the Fed’s preferred methods of measuring inflation, and Fed Chair Powell signaled this week that significant progress on inflation may allow the FOMC to act more quickly to cut interest rates. Currently, the median projection for next week’s PCE report is .3%, unchanged from January’s reading. The core PCE and year-over-year readings are also expected to remain unchanged, while the core PCE year-over-year is projected to jump .1% from 2.6% to 2.7%. 

CME FedWatch has already pulled back its projections for the probability that the Fed will move to cut rates at its next meeting in May. These odds stand at 12.9% to end the week, down from 14.9% yesterday and 27.7% one week ago. Interest rate speculation fueled much of gold’s historic price run throughout 2024, so traders should expect volatility if these projections fluctuate in either direction, especially after the February PCE goes public. 

Gold will end the day down but the week up, and silver will end the week down $0.88 per troy ounce.