Precious Metal Prices Move Little After Hotter-Than-Expected Inflation Reading

 

Precious Metals Moderate After Hotter-Than-Expected Inflation Reading

(Bullion News Network) – Gold prices moved little on Friday, gaining less than $1 per troy ounce. Silver prices moved similarly, with the precious metal adding fewer than 10 cents to its spot price. The even price action did little to move the needle on the gold-silver ratio, which stayed largely unchanged at 87.61:1. The muted price action surprised some analysts, as it came on the heels of a much higher-than-expected inflation reading in the July PPI, which measures the prices businesses receive for their goods and services. The upwards movement has been interpreted by some economists as evidence of inflationary pressure on the economy, which tends to be a bullish signal for safe haven assets like gold and silver. 

Prices dropped after the report was released on Thursday; gold ended down by over $20/ozt, while silver slid $0.50 lower from $38.51 to $38.01. On Friday, prices moved very little as markets presumably digested the news. Wall Street reactions were mixed on Friday, with the S&P 500 and Nasdaq all sliding on the news but remaining higher on the week as the Dow Jones Industrial Average hit a new all-time high. The high producer-side inflation reading also had an impact on the probability of an interest rate cut from the Federal Reserve. CME FedWatch projects a probability of 84.6% that the FOMC will vote to cut interest rates at its next meeting in September, down from 92.1% yesterday and 88.9% one week ago.

Platinum group metals saw more movement on Friday. Platinum lost around $14.50 per troy ounce, while palladium slid by just under $31.83/ozt. The price action favored platinum, marginally widening the existing divide between the two precious metals, which are both critical to the production of catalytic converters for the automotive industry. The two platinum group metals also decoupled on a larger weekly timeline. Platinum gained marginally on the week, while palladium lost ground. 

Gold also retreated minimally on the futures market. Gold futures have fallen consistently throughout the week, dropping another $1.50 per troy ounce today, just a week after hitting an all-time high last Friday. Last Friday’s all-time high for gold futures was precipitated by a rumor that large gold bars from Switzerland would be hit by U.S. President Donald Trump’s latest series of tariffs on imported goods. The Trump administration later clarified on Monday that gold bars would be exempted from the new tariffs on Switzerland, driving prices for the precious metal sharply lower and erasing much of last Friday’s gains. 

Next week, investors will be able to review the minutes from the Federal Reserve’s July meeting. Scheduled for release on Wednesday, this report could give markets more insight into how the FOMC may choose to vote when it meets again in September. Most notably, the July meeting minutes will highlight the concerns of the committee’s two dissenting members. Two FOMC governors voted against the Fed’s ultimate decision, something that has not happened since 1993. 

Gold and silver are set to end the day only marginally changed from Thursday’s closing price. The gold-silver ratio is largely unchanged compared to Thursday’s close.