Precious Metals Market News (19 July 2024) Gold, Silver Slip On Strong U.S. Dollar, Profit-Taking

 

Precious Metals Market News (19 July 2024) | Gold, Silver Slip on Strong United States, Dollar and Profit-Taking 

Gold prices (-$42.30) are down this morning (19 July), just two days after hitting an all-time high on Wednesday. Earlier this week, political and economic stressors rocketed the metal to a record-breaking high of $2,482.97 per troy ounce. Today’s drop places right around $2,400. Gold bulls will need to fight to keep the precious metal above the $2,400 line in order to establish a strong support.

Falling gold prices today come on the heels of a historic surge. Prices for the yellowish metal peaked at $2,482.97/oz on the 17th as traders priced-in heightened Federal Reserve interest rate cut bets and an increasingly uncertain U.S. political climate into their calls. The monthly CPI released on 11 July was also better than expected, which boosted the odds that the Federal Reserve could move to ease interest rates as early as September. 

Friday morning’s price dip has not completely erased the gold market’s gains, but the metal now faces a contentious battle along the $2,400 line. If gold bulls manage to establish a strong support at $2,400, rate cut signals from the Federal Reserve could push the metal even higher.

Silver’s spot price (-$.55) dropped morning, sustaining a downward slow that started earlier this week. The metal dipped below $30 for the first time since the 2nd of July on Thursday (18 July) and briefly slipped under the $29 support near market open today. The metal bounced back above $29 but made little headway toward $30+ as the day continued. 

Here’s Why Gold and Silver Prices Are Down Today

Analysts pinpoint three causes that help explain why gold and silver prices dipped today, 19 July: 

• A strengthening United States Dollar (USD)
• Profit-taking after gold’s all-time high 
• Mixed signals from the Fed on interest rate cuts 

The United States Dollar logged decent gains to start this week after the attempted assassination on former President Donald Trump. The currency also continued to gain traction against the Canadian Dollar this morning, giving traders a bit more faith in the strength of the U.S. Dollar. Historically, a strong USD keeps gold prices lower. Bullishness on the United States fiat currency translates to lower demand for alternative stores of value, including gold and silver. 

FXStreet reports that short-term profit-taking also played a vital role in the disappointing end-of-week performance of precious metals. A mass sell-off seems to have been triggered yesterday after the metal logged a fresh all-time high. Prices for both gold and silver declined marginally on Thursday as a result, and the slide continued Friday morning as traders pivoted to the United States Dollar. 

A strengthening Dollar collaborated with short-term profit-taking to drive gold and silver prices down, but new commentary from Federal Reserve officials may also be behind the latest gold and silver price-action. 

While the FOMC’s June minutes reaffirmed the Fed’s intention to cut rates once inflation moves more sustainably toward the 2% target, Federal Reserve officials in both San Francisco and Richmond took a more hawkish stance this week. Mary Daly, President of the Federal Reserve Bank of San Francisco, said yesterday that the economy is moving in the right direction, but that the Fed needs to see more progress before interest rate cuts are a possibility. 

Federal Reserve Bank of Richmond President Thomas Barkin agreed. “The right moment” to cut rates depends on a variety of factors, Barkin explained on Wednesday. Barkin is confident that inflation is moving toward a more acceptable level, but he “feels sure” recent CPI data will play a role as the FOMC considers whether or not rate cuts are appropriate for this moment. 

It is still unclear how significant of a role these comments played in today’s bearish movement in the gold and silver markets. The commentary does dampen optimism for investors anticipating more than one rate cut before the end of 2024. Analysts consider it highly likely that the FOMC will vote to decrease the target rate, which is current 525-550, at their September meeting. 

The Federal Reserve will meet on July 30th. Minutes from this meeting will be available three weeks later. Expect volatility in the gold and silver markets until traders see more reliable signals from the Federal Reserve concerning if and when interest rate cuts are coming.