Metals End the Week Down Amid Profit-Taking, Mixed Economic Signals

 

Metals End the Week Down Amid Profit-Taking and Mixed Economic Signals

(Bullion News Network) – Gold is down again this morning, ending the day down over 1% from yesterday’s spot price. The precious metal peaked on Wednesday at over $2,715 per troy ounce before taking losses on both Thursday and Friday to end the week. Gold prices are now down over 2% from the Wednesday’s weekly high. Silver also continued its slide at the end of this week. The metal gained over the weekend, holding steady at the $31.80-.90 level before shedding nearly a dollar on Thursday. Silver extended its losses today, dropping $.30 more cents to end the week at $30.67 per troy ounce. 

“Bullion is up more than 30% so far in 2024, but gains next year will likely be tempered by variables like growth and inflation.” Read more on our 2025 outlook in this Bloomberg article: https://t.co/wGU2MY0iSM

— World Gold Council (@GOLDCOUNCIL) December 12, 2024

This price action comes on the heels of a set of mixed economic and inflation signals. The November CPI saw U.S. inflation numbers come in in-line with market expectations, which led to a spike in the implied probability that the Federal Reserve will move to cut interest rates for the third time this year. Wholesale inflation painted a different picture of the American economy’s inflation problem, though. Wholesale prices increased by more than analysts anticipated, according to the November Producer Price Index (PPI). Prices for producers rose by 3%, .6 percent higher than projections. 

The wholesale inflation figures impacted market confidence that the FOMC will decide to cut rates by 25 basis points when the committee meets next Wednesday. CME Group’s FedWatch now projects an implied probability of 95.3% that another rate cut is on the way, down from 97.5% yesterday. Gold typically thrives on lower borrowing costs and falling interest rates, so analysts say a shift in market confidence concerning federal rate cuts may be behind the moderate pullback investors saw during the second half of this week. 

Metal prices are still benefiting from a wide-ranging set of geopolitical stressors, including a highly uncertain situation in Syria. The country’s leadership going forward is unclear following the collapse of the Assad regime last weekend. As several armies vie for control, the possibility of a larger conflict poses an acute threat to geopolitical stability in the region. Precious metals, often considered safe haven assets during periods of war or increased geopolitical tensions, tend to perform well under these kinds of uncertain geopolitical conditions. 

China’s PBOC also resumed buying gold in November after a six-month hiatus, a decision which had an immediate impact on the price of the commodity. China was the world’s largest state buyer of gold in 2023, and the country is on track to repeat its dominance as a gold purchaser in 2024. 

Despite the recent pullback, leading market projections for gold prices in 2025 remain high. The World Gold Council anticipates a “positive but much more modest” growth for the precious metal next year. President-Elect Donald Trump’s policies, central bank buying, monetary policy changes, and several other key factors will influence gold prices in 2025, according to World Gold Council analysts. As for silver, experts project that the global deficit will continue to grow as green energy technology becomes more commonplace in decades to come. 

Both silver and gold remain up on the year. The gold-silver ratio jumped this week from a low of 83.57:1 on Monday to a weekly high at 86.47:1 today to end the week.