Midweek Precious Metals Market News (17 July 2024) | Gold Cools After Record Gains, Silver Dips Below $31

 

Midweek Precious Metals Market News (17 July 2024) | Gold Cools After Record Gains, Silver Dips Below $31/oz

A bullish gold market deflated a bit this morning. Gold (-$9.67) dropped nearly $10 since market open but still remains well above its previous all-time high from May of 2024. Yesterday, a combination of economic and political stressors rocketed the metal to a new high of nearly $2,470 per troy ounce. Analysts point to the attempted assassination of former President Donald Trump, bullishness on the prospects of another Trump presidency, and rumors of interest rate cuts from the Federal Reserve as three reasons behind the metal’s historic price jump. 

Today (17 July) saw a slight correction, with gold taking marginal losses. The metal is still nearly $20 above its last all-time high, which it set on 20 May of this year. For now, gold bulls set their sights on $2,475. A solid support at that level would be a major win for gold. In the next few weeks, financial data from the Bureau of Labor Statistics (BLS) will play a key role in gold’s price-action. State unemployment data is slated for release on Friday (19 July) and should give key insights into whether or not multiple interest rates are still in the cards for 2024. 

In an interview earlier this week, Federal Reserve Chair Jerome Powell confirmed that last week’s better-than-expected CPI does increase the Fed’s confidence that the economy is moving sustainably toward their 2% inflation target: 

The three readings in the second quarter, including the one from last week, do add somewhat to confidence.

Powell refused to give any signal on the timing of rate cuts, but analysts now believe that rate cuts in both September and November are highly likely. Expect gold price trends to correlate closely with the tenor of upcoming economic data releases as investors place their bets on whether or not we’ll see the Fed ease back on interest rates before the end of 2024. 

Silver (-$.91) took heavier losses this morning. Silver bulls have struggled to establish any kind of consistent support above $31, so today’s silver price-action is no big surprise. The metal lose nearly $1 on the day but remains strong above $30/oz. 

It’s remarkable that gold made new highs today but the accumulation of the metal by central banks is likely just getting started.

If you’re looking for a key macro indicator of how early we probably are in this cycle, consider the gold/silver ratio, which is near historical… pic.twitter.com/KEf8ifYKN5

— Otavio (Tavi) Costa (@TaviCosta) July 16, 2024

Gold’s risk-motivated run yesterday coupled with a poor silver performance to drive the gold-silver ratio to a two-month high of 80.96:1. A high GSR might give silver a bit of upward mobility as traders consider switching from gold to the undervalued metal. Major GSR see-saw trading is unlikely, as the gold-silver ratio has crested above 90:1 several times in 2024. The yearly high for the gold to silver ratio is 91.79:1. 

Investors are carefully watching the Bureau of Labor Statistics. The tone of upcoming data releases could make or break the case for an early rate cut from the Federal Reserve.