Precious Metals Market News (2 August 2024) | Gold, Silver See Midday Reversal After Hitting Local Highs

 

Precious Metals Market News (2 August 2024) | Gold and Silver Reverse Course Midday After Hitting Local Highs 

Gold (-$12.07) began the day with a run toward the $2,500 line, peaking at $2,476.41 near market open. A correction began at around 9 AM CST, with gold shedding over $50 from 9-10. Since that point, prices have recovered modestly, but gold remains down on the day. As of 1:35, gold sits at $2,436.72 and is down $12.07 from yesterday’s prices. For gold bulls, the next big battle happens at the $2,450 level. Gold crested above $2,450 yesterday, but today’s drop saw gold slide closer to $2,225/oz. 

Silver (+$.04) followed a similar trend, peaking at $29.11 near market open before sliding over $1 and slipping below the $29 level. Despite the reversal, silver remains marginally up on the day. Like gold, silver prices have started to recover at midday but remains only slightly up since yesterday, 1 August. Today’s price-action still has silver up on the week, although the reversal once again makes a consistent support at $29 a tough battle for silver bulls. 

The morning run comes on the heels of more good news from the Federal Reserve. Although the FOMC voted unanimously to keep interest rates unchanged at their July 30-31 meeting, commentary from Chair Jerome Powell confirmed that an interest rate cut is likely to occur as early as the Fed’s September meeting. Powell remains confident that the U.S. economy is on the right track to hit the Federal Reserve’s longstanding 2% inflation target, although he was reluctant to provide any concrete signals on when the committee is likely to ease the Fed’s monetary policy. 

Here’s what Federal Reserve Chair Jerome Powell had to say: 

As the labor market has cooled and inflation has declined, the risks to achieving our employment and inflation goals continue to move into better balance.

Weak Labor Market Data Boosts Bets For a September Rate Cut

This morning, the Bureau of Labor Statistics released its employment situation summary for the month of June. The report revealed an unexpected cooling in the U.S. labor market. Wednesday’s commentary from Chair Jerome Powell reaffirmed that an abrupt downturn in the labor market is one trigger that could accelerate the Fed’s decision to ease back on interest rates: 

That’s not something we’re looking for. But, yes, if you think about, you know—in, in the base case, the economy is performing well—the labor market remains strong. If we saw an unexpected weakening in, in—certainly in the labor market, that would certainly weigh on cutting sooner.

An abrupt downturn in the labor market has played into heightened bets that an interest rate cut will happen in one of the Federal Reserve’s upcoming meetings, Reuters reports. The troubling labor data from this morning’s report revived calls for a rate cut, which has historically boded well for precious metals. 

Gold jumped to close in again on its latest record, after weaker-than-expected US jobs data reaffirmed expectations that the Federal Reserve will start to cut interest rates soon. https://t.co/WC1KNM4dww

— Bloomberg Markets (@markets) August 2, 2024

Gold and silver prices briefly peaked at local highs early Friday morning, but a strong midday reversal erased those early morning gains as both metals slid from their early-morning local highs. As the market continues to price-in today’s labor market data and renewed calls for interest rate cuts, expect volatility in precious metal markets.