Precious Metals Market News (9 August 2024) | Gold Recovers from Early Week Crash, Silver Steadies Above $27.50

 

Precious Metals Market News Update (9 August 2024) | Gold Secures Recovery After Early Week Crash, Silver Moves Sideways Along $27.50 line

Price-action in the gold and silver markets this morning (9 August) finalized a near-complete recovery for gold and a partial recovery for silver. On Monday, both metals dipped amid a global market rout. Gold slid below the $2,400 support on 6 August, while silver prices dipped far below a key $27/oz support. International markets rebounded starting on Tuesday, and gold and silver began to recover Thursday morning. 

As of Friday afternoon, gold has recovered nearly all of its early week losses, settling above $2,430. Silver gained a dollar back Thursday after logging Wednesday’s weekly low of $26.60 but moved sideways between Thursday and Friday. Reestablishing a support at $28 will be remain a key objective for silver bulls hoping for a return to the $30+ silver prices of mid-July. 

Gold bulls secured a bit of breathing room for the metal today. Gold will likely close the day up marginally and over $30 above the $2,400 support. This puts gold within $50 of its all-time high of $2,482.97, a record set less than one month ago on 17 July.

Both gold and silver markets should be looking forward to the Producer Price Index, which is slated for release at 8:30 AM ET next Tuesday (13 August). This report will give markets more cues on where federal interest rates are heading, particularly in regards to whether or not the Federal Reserve feels confident that the economy is approaching the longstanding 2% target for inflation. 

Next Week: Precious Metal Markets Eye Upcoming Producer Price Index

While last Friday’s troubling employment data caused global markets to dip on Monday, news of a weakening U.S. labor market supported bets that the Federal Reserve will move to cut interest rates sooner rather than later. On 31 August, Federal Reserve Chair Jerome Powell reiterated in a press conference that a sudden stutter in the United States labor market is one potential trigger for abrupt rate cuts: 

If the economy remains solid and inflation persists, we can maintain the current target range for the federal funds rate as long as appropriate. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we are prepared to respond. 

Monday’s market rout prompted some prominent economists to call on the Fed to act quickly to reduce interest rates. The next Federal Reserve meeting is scheduled for 17-18 September, and traders are already pricing in renewed faith that a long-awaited rate reduction will come at that meeting. 

Speculation that the Federal Reserve will commence cutting interest rates next month kept sellers at bay on Friday, however the gains by most indices were modest. #USD #WallStreet #DowJones #US Dollar #BigNewsNetworkhttps://t.co/2blyscIcYo

— Big News Network (@bignewsnetwork) August 9, 2024

Next Tuesday (13 August), precious metal traders will turn their attention to the Producer Price Index (PPI) released by the Bureau of Labor Statistics. This report is one of several metrics used by the Federal Reserve to gauge inflation. Data from this price index could boost the likelihood of an early rate cut. This year, the Federal Open Markets Committee (FOMC) has been clear that they want to see more evidence that inflation is moving comfortably toward the 2% target before they consider cutting rates. 

In the minutes from their 11-12 June meeting, the FOMC unanimously agreed to maintain the 525-550 target rate until more favorable data supports a move toward 2% inflation: 

The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.

Interest rate cut speculation has played a major role in price-action across all precious metal markets in the first three quarters of 2024. Good news from next week’s PPI should influence gold and silver prices, which have consistently climbed this year in response to bullishness on the prospects of a rate cut from the Federal Reserve.