Gold Steadies Above $3,000; Silver Moves Sideways

 

Gold Steadies Above $3,000; Silver Moves Sideways

(Bullion News Network) – The spot price of gold pulled back moderately this afternoon to start the week. Gold lost just over $10 but remains above the newly established $3,000/ozt support. Silver prices moved little; the precious metal gained $0.04 per troy ounce on the day. The gold-silver ratio dropped slightly, losing 0.32:1 and settling marginally above 91:1. Safe haven demand remains high, and markets are still concerned about the impacts that President Trump’s tariffs could have on consumer prices and the general economic outlook.

Wall Street recovered to start the week amid some evidence that the White House may scale back some of its tariff proposals. Today’s flash U.S. services PMI came in better than expected today, which is typically a good sign for stocks but a bearish signal for safe haven assets like gold. The manufacturing PMI came in softer than expected but fell below projections by just a point, a report that Wall Street didn’t seem to mind. This report comes before a series of economic data points scheduled for release later this week. 

These economic reports include a home price index report tomorrow, as well as the consumer confidence reading for the month of March. Consumer confidence data should play a major role in how markets react to round out the week; consumer confidence has been falling and is projected to drop further on Tuesday. Thursday, markets will review initial jobless claims and pending home sales data. Analysts expect initial jobless claims to jump from 223,000 to 226,000 and for pending home sales to rebound by 1% after a 4.6% drop in January. 

The final consumer sentiment reading will premiere on Friday alongside Personal Consumption Expenditures (PCE) for the month of March. This report is one of the Federal Reserve’s key inflation metrics, and Fed Chair Jerome Powell suggested that major changes in the inflation rate could impact the FOMC’s approach to cutting rates in 2025. Mr. Powell spoke to reporters on Wednesday, driving both gold and Wall Street higher as the economist adopted a tone of cautious optimism concerning the state of the U.S. economy and the outlook for consumer prices and the job market. 

Median projections anticipate that the PCE, year-over-year PCE, and core PCE will remain unchanged from last month but that the year-over-year core PCE will jump .1% from 2.6% to 2.7%. This report is slated to be particularly important for traders betting on how the Fed will interpret the economic situation at its May meeting. Last week, the FOMC voted unanimously to keep the target federal funds rate unchanged at 2.25-2.50%. At the post-decision press conference, Powell acknowledged that President Trump’s tariffs could have an inflationary effect on the economy. However, Powell says, the Fed still projects two rate cuts for 2025. 

Precious metal prices are likely to hinge largely on the tone of this week’s various economic data reports. Data that could motivate the FOMC to cut rates will likely drive demand for safe haven assets, which tend to appreciate in environments characterized by falling interest rates. CME FedWatch projects an 11.5% probability that the Fed will opt to cut rates at its next meeting, down from 21.9% last week and 26.6% one month ago. Interest rate cut speculation drove much of gold’s historic run in 2024, so analysts expect that movements in the implied probability of a rate cut could impact the value of precious metals heading into Q2. 

Gold will end the day marginally down, while silver made a modest gain. The GSR is down but remains at a local high above 91:1.