Metals Continue Midweek Recovery – Precious Metal Price News (12 June 2024)

 

UPDATE (5:30 PM CST) – Precious Metals Backslide After Federal Reserve Confirms Unchanged Rates

The moderate recoveries logged for gold, silver, and platinum were erased by the end of the trading day on Wednesday. Gold prices are now up only $.62, while platinum gains withered to +$1.42 on the day. Silver suffered the most significant backslide, dropping from +$.85 to a small loss of $.03. Comments from Jerome Powell of the Federal Reserve are likely behind the bearish end to an otherwise optimistic day for precious metal investors. 

In addition to confirming investor fears that the real interest rate will remain unchanged in June, the Fed now claims that only one interest rate cut is likely this year. 

Precious metal markets reacted swiftly, erasing a day of bullish gains in just a few hours. Investors should carefully watch the rest of the week – it seems likely that more bad news is on the way for metal-heavy portfolios as tomorrow’s market opens to respond to the Fed’s latest take on interest rates. 

Precious Metal Price News (12 June 2024) – Metals Continue Midweek Recovery 

Recovery across the precious metal markets continued Wednesday morning. As of the time of writing, gold is up over $21 on the day, and platinum’s gains are closer to $16.50 per ounce. This morning’s biggest winner was silver. The metal climbed over $.85 on the day and $1 since last week’s price retraction. All three precious metals seem to be on the path to recovery after an optimistic U.S. jobs report sent markets tumbling last Friday. 

The Non-Farm Payroll (NFP) report released June 7 revealed a stronger-than-expected U.S. jobs outlook for May. This favorable job creation trend dampened the odds of interest rate cuts emerging from the Federal Reserve’s next meeting, leading to a freefall in all three major precious metal markets. Monday saw a very modest recovery, with each of the precious metals logging marginal gains at market close after Friday’s crash. Tuesday chilled expectations of an all-out recovery, but this morning’s price-action is a good sign for metal stackers – and especially for silver bulls. 

Metals are up today because of favorable CPI data, which released on June 11. The report demonstrated that inflation may be slowing, boosting the odds of a rate cut sometime in the next few months. 

All markets now look forward to the next Federal Reserve meeting, which will conclude later today. Remarks from members of the Board should give investors more cues on whether rate cuts are coming sooner rather than later – and what to expect out of gold, silver, and platinum. 

Metal Markets Eye Federal Reserve Meeting For Cues

The Federal Reserve’s hinted last year that three interest rate cuts may be coming at some point in 2024. So far, troubling inflation data and optimistic job creation rates have prevented Federal Reserve Chair Jerome Powell from pulling the lever and easing rates. Precious metal markets are watching the Fed closely, of course. Rate cuts should have a near-immediate positive impact on price-action across all metal markets. The Guardian reports that Friday’s favorable NFP job creation report “slams the door shut” on the likelihood of a rate cut in the next couple of months. 

One step forward, two steps back. Today’s data undermines the message that other recent economic data have been giving of a cooling U.S. economy, and slams the door shut on a July rate cut.”

Indeed, Friday’s Non-Farm Payroll report chilled investor faith in the likelihood of an early rate cut enough to drive down prices in gold, silver, and platinum markets. Markets began to recover on Monday, and this morning’s price-action suggests that some investors are still hoping for marginally good news from the Fed after their Wednesday meeting concludes. Rate cuts this month are out of the question. Federal Reserve watchdog CME Group has reduced their probability of easing rates to a trivial .1%. 

Complicating gold’s price-action in particular is another major development out of China. 

China Stopped Buying Gold – Here’s What to Expect

Gold’s record-breaking 2024 bull run may be slowing, and China’s central bank can explain why. Right as other metal markets grappled with favorable NFP news and diminished betting odds for an early Federal Reserve rate cut, data released on Friday demonstrated that China has stopped its mass gold-buying efforts. China was the world’s biggest gold buyer last year and was on track to retain its unprecedented gold purchasing trends in 2024. 

🇨🇳#BREAKING
SPOT GOLD PRICE TUMBLED BY $20 PER OUNCE AS CHINA’S PBOC STOPPED GOLD RESERVES BUILDING.#CHINA #GOLD $XAU $XAUUSD https://t.co/ago4ohJWxM pic.twitter.com/DEdeXW98Zt

— CN Wire (@Sino_Market) June 7, 2024

Friday data showed that the gold reserves of the People’s Bank of China, China’s central bank, remained unchanged from April to May. China has officially pulled its money out of gold – at least, for the time being. As a major institutional backer of the precious metal, China’s retraction from the gold market had an immediate effect. Gold prices fell more than $80 last Friday before starting a slow recovery trend that continued this morning. 

Expect gold’s bull run to slow, even if the metal does continue to appreciate in the next few weeks. China’s reasons for ceasing its gold purchasing efforts are unclear. Also up in the air is when – if at all – the PBOC will resume its record-breaking gold intake. If China steps out of the gold trade for a prolonged period of time, expect gold prices to struggle to keep up with silver. A gold-silver ratio retraction below 70:1 is not out of the question, especially if gold dips to $2200 and silver’s recovery sends it above $31. 

Precious Metal Market Forecast (6/12/2024)

The midweek report is optimistic for gold, silver, and platinum, but the recovery trend may not last for long. Interest rates are unlikely to change after today’s Fed meeting, and investors should expect to see red tomorrow once the Powell confirms that high interest rates are here to stay for at least another month. Commentary from board members should play an important role in determining how large of a hit the three major precious metals will take after today’s Federal Reserve meeting. 

The Personal Consumption Expenditures (PCE) index for this month will be released on June 28 and should give more insight into the odds of a rate cut coming at the Federal Reserve’s July meeting. Yesterday’s CPI report has breathed a bit of life into markets as investors look forward to the renewed possibility of rate cuts as early as August. Until then, expect markets to sway as investors try to make sense of mixed signals from the Fed – and a major breech in institutional purchasing from China.