Gold, Silver Slip After Weak US Economic Data

 

Precious Metals Slip After Weak US Economic Data Report

(Bullion News Network) – Gold prices pulled back on Wednesday, losing $28 by market close. Silver prices moved in lockstep, with the precious metal pulling back $0.27 per troy ounce. The relative parity drove the gold-silver ratio marginally higher by 0.11:1 to close Wednesday evening at 100.62:1. This is the second consecutive loss for gold and silver, both of which are currently down on the week. Today’s retreat comes on the heels of a mixed set of U.S. economic data reports published earlier this morning. The PCE index, one of the Federal Reserve’s preferred measures of inflation, retreated compared to February’s numbers. Most notably, the Core PCE for March clocked in at 0.0%, suggesting that inflation may be slowing. 

The United States GDP unexpectedly fell by -0.3% in Q1 2025, down from 2.4 in Q4 2024 and soundly below the median forecast of a 0.4% increase. Wednesday’s GDP is the first negative reading since 2022. The move comes just one day after a consumer confidence report showed that Americans are increasingly concerned that the White House’s tariffs, combined with the ongoing U.S.-China trade war, could slow economic growth and lead to higher consumer prices. Analysts point out that today’s consumer spending report, which showed an unexpected .7% increase in March, may reflect Americans’ uncertainty about how President Donald Trump’s aggressive trade policies will impact the U.S. economy. 

The Dow and S&P 500 etched out minimal gains to end what has been a historically volatile month on Wall Street. The tech-heavy Nasdaq composite closed lower. In a Truth Social post, President Trump suggested that the dour 100-day stock market performance – one of the worst in decades – is actually the fault of his predecessor, Joe Biden. The U.S. leader explained in this post that the poor performance has “nothing to do with tariffs,” and that the market boom he projects will be “like no other.” Wall Street seemed to take the troubling GDP setback in stride as traders continue to seek clarity amid an uncertain introduction into President Trump’s second term. CNN’s Fear and Greed Index finds a moderate recovery from last month’s reading, which was one of the worst in several years. Safe haven demand jumped this week but remains down compared to its peaks in early April and March. 

Next in focus for precious metal traders will be the initial jobless claims report, due Thursday morning, followed by nonfarm payrolls and the U.S. unemployment rate, both of which are due for release on Friday. Combined with today’s PCE index, these reports should give investors a bit of last-minute insight heading into the Federal Reserve’s next meeting, which is scheduled for next Wednesday. Federal Reserve Chair Jerome Powell’s commentary following this meeting should be particularly important to markets. Earlier this month, safe haven assets soared to new heights as President Trump suggested in a Truth Social post that he might be interested in firing the economist from his position within the Federal Reserve, a move that would have threatened the longstanding independence of the Fed. 

The White House pulled back on this claim, with President Trump confirming that he has no plans to fire Powell in the near future. Nonetheless, Chair Powell’s commentary following the Fed’s May meeting will likely give investors valuable insight into how the FOMC views the economic situation heading into May. More importantly, the Fed’s findings and Powell’s speech should ignite a new period of rate cut speculation. The Fed has not voted to cut rates since its 25 bps cut in December, and CME FedWatch forecasts only a 6.0% probability that the FOMC will vote to cut rates at next week’s meeting. Given the role that interest rate speculation played in gold’s historic price run in 2024, expectations that rates could be coming down may be a major price driver for safe haven assets heading into May. 

For now, gold and silver traders are on the lookout for more clarity on the United States’ economic direction. This clarity should come on Thursday and Friday, with key labor market readings on deck and the Fed preparing for what is likely to be another no-cut meeting.