Metals Log Modest Gains After Lagging Consumer Confidence Reading

 

Metals Gain Modestly After Lagging Consumer Confidence Reading

(Bullion News Network) – Gold and silver prices staged a moderate recovery today after yesterday’s drop. Gold gained just over $2.50 per ounce by market close, and the price of silver logged nearly $0.20/ozt to come within just a few cents of $32 per troy ounce. On Tuesday, the February consumer confidence report released by the Conference Board came in considerably lower than projections. Consumer sentiment on the month dropped from 105.3 to 98.3, the biggest monthly decline since August 2021. The Conference Board found that the Expectations Index fell below 80 for the first time since 2024, a sign that the Board notes typically precipitates a recession. Both Wall Street and the precious metals market sunk on the news, with gold losing over $35 and silver prices dropping to a recent low. 

Today’s economic reports were limited, with January new home sales numbers dominating headlines. New home sales declined in January by more than analysts expected, falling from 734,000 in January to just 657,000 this month. Experts say that rising home prices are the main impetus behind declining new home sales. On Tuesday, the S&P Case-Shiller home price index for the month of December found that prices had increased in twenty cities by .1%, up to 4.5% from the previous figure of 4.4%. In conjunction with declining consumer confidence readings, markets increasingly feel that Americans are increasingly worried about climbing prices for both consumer goods and real estate properties. 

U.S. President Donald Trump said earlier this week that the universal tariffs on imports from Canada and Mexico are expected to move forward as planned. Barring a last-minute deal between the three North American leaders, these tariffs are slated to go into effect next Tuesday on March 4th. Economists say that if finalized, the tariffs could have a major impact on the price of goods; Canada and Mexico remain two of the United States’ most significant trading partners. The likelihood of retaliatory tariffs remains high. The precious metals market could be uniquely impacted by tariffs on America’s North American trading partners, analysts say, given how much gold, silver, and other metals are imported annually from the two neighbors. 

The tariffs, which were planned one month ago but narrowly delayed after Mexican and Canadian leaders pledged to reroute military and economic aid to their shard borders with the United States, would impose an export fee of 25% on all products coming into the United States from each country. Analysts disagree on how the tariffs could impact the average American’s tax burden, with one nonpartisan source saying that the average American tax burden could increase by $800 or more in 2025 on the heels of the aggressive economic policy. As for the additional 10% tariff imposed on Chinese goods under the White House plan, Americans could foot the bill for an extra $172 per year per household. 

Key data reports scheduled for release on Thursday and Friday could shake markets up heading into next week. Tomorrow, initial jobless claims will become public; analysts project an increase from 219,000 to 225,000. The national GDP is expected to remain unchanged at a growth rate of 2.3% for Q4 2024. The week’s most vital data dump will happen on Friday, when the full slate of Personal Consumption Expenditures (PCE) reports scheduled for publication. The PCE is one of the Fed’s core measures of consumer inflation and could play a key role in determining whether the FOMC will choose to cut rates at its next meeting in March. Early projections anticipate that the PCE will remain unchanged at 0.3% in January, while the year-over-year PCE should decrease slightly from 2.6% to 2.5%

The core PCE should provide a better insight into consumer good prices. Right now, analysts expect that the core PCE index will jump from .2% to .3% on Friday. Given that consumer expectations of inflation rose in February, this report should be a major data point that the Fed uses at its March meeting. CME FedWatch currently projects a 5% implied probability that the Fed will opt to cut rates by 25 basis-points, up from 4% on Tuesday and 3% one week ago. 

Both gold and silver prices remain down on the week after Tuesday’s drop and today’s modest gains. The gold-silver ratio sits near a local high at 91.27:1, down from 91.83:1 on Tuesday after silver gained a bit of ground on the yellowish precious metal.