07/07/2023: This Week in Gold with Market Update

Price Action: 

Gold started the week trading at $1,917. The yellow metal experienced a quiet week, with little movement to the upside or to the downside. Resistance was found at the $1,930 level multiple times throughout the week, with price unable to break through this point. Gold experienced a drop off on Thursday, hitting a weekly low of $1,906 in the process. The FOMC Minutes release on Wednesday evening may have been a factor in this sell off. Price settled near the $1,910 level, and at the time of writing, gold is trading at $1,914. 

Silver opened the week at $22.74. Like gold, the price of silver stayed within a tight range for most of the week. A small rally was experienced  at the end of the trading day on Wednesday, where silver reached a high of $23.31 This was 0.6% higher than the open price. Similarly to gold, there was a small sell off on Thursday where price fell to a weekly low of $22.66. Price steadied at the $22.70 level and experienced little variation from there. At the time of writing, silver is trading at $22.71.

Market Update: 

FOMC Minutes:

With little news throughout the week, there was little movement in gold and silver markets. On Wednesday evening, minutes from the FED’s meeting in June had been released. The main takeaway from this new piece of information was the FED’s focus on raising rates again, with the next rate hike expected in July. FED policy makers decided to halt rates in June, due to signs of easing inflation. The decision was made with the intention of raising rates again if it was needed. The FOMC Minutes revealed that 16 out of 18 members expected that there would be at least one more rate hike in 2023, with 12 out of the 18 expecting 2 or more. 

This may have contributed to the slight sell off in the gold market on Thursday, as market participants may link the talk of multiple rate hikes to a decline in price. Rising interest rates are inversely related to the price of gold. 

U.S. Unemployment Rate:

U.S. jobs report data for June is to be released on Friday, with the forecast being that there will be an additional 225,000 non-farm payroll jobs. Employment numbers have stayed strong despite the rise in interest rates. The FED is studying labour market data to make informed decisions on interest rate policy. A weakening U.S. labour market is what the expected result would be from rising interest rates. The expectation would be that gold would move to the upside on weaker U.S jobs data.