Precious Metal Prices Stall Ahead of Key September Data Reports

 

Precious Metal Prices Stall Ahead of Key Economic Data Reports

(Bullion News Network) – Prices for gold and silver are still down this week, although this morning saw a moderate recovery for silver and a minor movement near $2,500 for gold. Gold’s biggest weekly drop happened last Thursday, when the precious metal dropped $20 before two consecutive days of losses on Monday and Tuesday of this week. Gold recovered around $7 since market open Friday, inching closer to the contentious $2,500 line.

Silver logged a weekly high last Thursday, peaking at $29.42/oz before a steady decline that left the metal just a few cents above $28 yesterday. Silver prices recovered more dramatically than gold, logging $.28 in gains by market close today. The precious metal is still down over $1 from its monthly high of $29.97 per troy ounce, which was the market close price on August 27th. 

The price-action today pulled the gold-to-silver ratio down by nearly half a point to 88.07:1. This is nearly four points higher than the lowest GSR of the month, which was the ratio of 84.18:1 logged on August 26th. The gold-silver ratio is also within 2 points of a monthly high, 89.59, attained at the beginning of August on the 7th. 90:1 has been a major resistance for the GSR this year; the ratio has consistently fallen after crossing the 90:1 barrier. 

Overall, precious metal prices continue to stall after a whirlwind of bullish momentum toward the end of August. Interest rate speculation has been behind much of the volatility in gold and silver markets this year, and a slew of economic data reports slated for early September suggest that this month will be more of the same. 

Why Are Gold and Silver Markets Losing Steam? 

Gold and silver prices have stagnated after an exceptional late-August performance. A weakening job market and softening inflation numbers combined to confirm a September interest rate cut from the Federal Reserve, which drove prices up for both metals as traders priced in the first rate cuts since 2020. With this September rate cut fully priced in, precious metal bulls are betting on a rate cut larger than the 25 basis point reduction currently projected by analysts. 

Expect key economic data reports to play a key role in the direction of precious metal markets heading into September. With a rate cut at the Fed’s September 17th meeting virtually guaranteed, the bulk of speculatory trading this month surrounds how large of a rate cut markets should expect from the Federal Open Market Committee (FOMC). The committee has frequently emphasized the Fed’s dual mandate to increase employment and decrease inflation.

Speaking at the annual Jackson Hole Economic Symposium, Jerome Powell reiterated that the time may be right for rate cuts, but that the tone and timing of these cuts depends on inflation and employment numbers: 

The upside risks to inflation have diminished. And the downside risks to employment have increased. As we highlighted in our last FOMC statement, we are attentive to the risks to both sides of our dual mandate. The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.

Metal prices dipped last week after the Personal Consumption Expenditure (PCE) index fell in line with expectations, undercutting bets that an extreme dip in the inflation rate would justify a September interest rate cut of 50 basis points or more. With over two weeks to go before the FOMC meets to discuss rate adjustments, several key reports will paint a broader picture of the U.S. economic situation – and what traders should expect from the Fed heading into Q4 2024.

Here are the main economic data reports to watch out for as we finish the trading week.

Report	Release Date	Find It Here
U.S. Job Openings	September 4th, 2024	Bureau of Labor Statistics
Initial Jobless Claims	September 5th, 2024	Department of Labor
U.S. Employment Report U.S. Unemployment Rate	September 6th, 2024	Bureau of Labor Statistics

Next week, the August Consumer Price Index (September 11th) and Producer Price Index (September 12th) will give the FOMC – and traders – more insight into where interest rates may be heading. An unexpected drop in the labor market or aggressive movement toward the 2% inflation target would be triggers for a 50+ basis point interest rate cut, according to analysts. 

Gold and silver prices stagnated to begin the month of September as traders scaled back bets for a 50+ bps rate cut from the Federal Reserve at its September 17th meeting. Expect upcoming economic data releases to play a significant role in price movements across gold and silver markets.