Gold, Silver Pull Back As Markets Await Economic Data

 

Gold and Silver Prices Soften As Trump Pulls Back on Tariffs

(Bullion News Network) – Gold and silver prices began the week in the red, extending last Friday’s losses to begin the week. The spot price of gold dipped $20, falling below the $2,900/ozt level for the first time since last Monday, March 3rd. Silver prices remain elevated from last Monday’s close but down from the midweek peak ($32.67) from last Wednesday. Silver slid nearly $0.40 per troy ounce this morning to start the trading week. Both precious metals are coming off of a marginal loss last Friday, when safe haven assets pulled back as President Donald Trump announced a sweeping set of sanction exemptions for Canada and Mexico. Today’s pullback comes just days before fresh economic reports from the Bureau of Labor Statistics, including the Consumer Price Index (CPI) and the Producer Price Index (PPI). 

Tomorrow, traders will review the February NFIB Optimism Index, a monthly report that surveys business owners’ economic outlooks. Forecasters project a marginal drop from 102.8 to 101.0. A larger drop-off could be particularly impactful for market readings, given the troubling consumer sentiment data that opened February. The week’s key data reports will come on Wednesday and Thursday, though, when CPI and PPI data for the month of February becomes public. These reports are some of the core metrics used by the Federal Open Market Committee to assess inflation in the United States, and they will also be the last two major economic data reports surveyed by the Fed before it meets on March 19th. 

Federal interest rate speculation remains a major catalyst for safe haven asset price action, as was the case throughout 2024. Gold and silver prices were not largely impacted by interest rate fluctuations in Q1, but this is likely because the Fed only met once in January and signaled that a rate cut likely won’t come until inflation further cools or the labor market unexpectedly falters. At the end of 2024, the Federal Reserve adjusted its projections from several to just two rate cuts in 2025, citing growing uncertainty surrounding both inflation and the labor market. January’s decision fell largely in-line with this shift in rhetoric, which Transamerica calls a transition from viewing rate cuts as a “calibration” to displaying more “data dependence specifically pertaining to inflation.” 

Inflation remains a key concern for the Fed. The PCE index, one of the Fed’s top measures of inflation, began trending higher after reaching a one-year low in June. The 12-month percentage change CPI has trended up since October, suggesting that inflation may be stickier than the Fed has previously hoped. Analysts project a decrease in the year-over-year CPI from 3% to 2.9%, as well as a decrease in the core CPI from 0.4% to 0.3% and a drop in the year-over-year CPI from 3.3% to 3.2%. Forecasters anticipate a decrease of .1% in the Producer Price Index and no change in the core PPI. 

The tone and tenor of these two reports should have a major impact on the probability that the Fed opts to cut interest rates at its March 19th meeting. CME FedWatch currently projects a 4% chance that the Fed will cut rates by 25 basis points, up from 2% one day ago but down from 8% one week and one month ago. An unexpected rise in inflation on either report could spur the Fed to rethink its plans, which likely currently involve another month of unchanged interest rates. 

In the meantime, gold and silver prices dropped to start the week amid an apparent sell-off while investors await more economic data from the BLS.