22/03/2024: This Week in Gold with Market Updates:
Price Action:
Gold Price:
Gold opened the week trading at $2,156 an ounce after closing the previous week 1.07% lower. The previous week’s lower move saw gold price break its streak of 3 consecutive weeks of moving to the upside and stalled the momentum that the yellow metal had been experiencing.
On Monday, price did not have any eventful moves in either direction. With big economic news coming out during the week, including important FED information regarding the future of interest rates, investors decided to stay quiet in anticipation. Price ultimately closed the day $4 higher at $2,160 an ounce.
On Tuesday, price followed a similar trend to what was seen on Monday. Gold consolidated for much of the day, again in anticipation to important economic news to be released later on in the week. Price retreated slightly, falling $2 an ounce to close at $2,158. This was also influenced by a strengthening dollar.
On Wednesday, gold opened at $2,158 an ounce. Price initially consolidated throughout the day but made a large move to the upside after FED Chair Powell’s dovish remarks surrounding the future of interest rates. Price rallied 2.1% in just a few hours to post new all-time highs. It was the first time that the gold price moved past $2,200 an ounce. This move was further spurred on by a falling dollar and falling treasury yields. Price ultimately closed the day at $2,186 an ounce.
On Thursday, gold prices eased slightly, with price correcting after the surge that was experienced on Wednesday. Driving this correction in price was the DXY’s 0.8% move to the upside. Price fell $5 to close the day at $2,181 an ounce.
On Friday, gold gradually declined throughout the day. Price continued to correct itself after the surge it had experienced on Wednesday evening following the FED’s interest rate projections. At the time of writing, price is trading at $2,164 an ounce, meaning gold is on track to close the week 0.36% higher.
Silver Price:
Silver followed a bearish trend for most of the week, leaving it on track to break its consecutive winning streak of 3 weeks. Price was influenced by the same factors as gold throughout the week, with investors reacting to the FED’s comments on Wednesday by moving the price 3.1% higher in just 4 hours.
However, the market then corrected this huge run-up in price with an equally large sell-off. Price then continued to move further to the downside. After opening at $25.18 an ounce, price is currently trading at $24.71 an ounce. This leaves silver on track to close 1.9% lower.
Market Updates:
Tuesday 19th March, Eurozone CPI:
Headline inflation in the Eurozone came in at 2.6% YoY. This was in line with analyst expectations and lower than the previous month’s figure of 2.8%. The Eurozone is now on track to meet its target rate of 2%, which leaves the Central Bank in a prime position to begin cutting rates in 2024.
Core CPI came in as expected at 3.1%.
Tuesday 19th March, U.K. CPI:
U.K. headline inflation came in slightly better than expected at 3.4%. This was 0.1% better than analyst expectations and better than the previous month’s figure of 4%.
Wednesday 20th March, FED Interest Rate Decision:
The FED decided to keep interest rates unchanged in their latest meeting.
However, it was the comments after this meeting that caused markets to stir. Despite two consecutive hot inflation reports, FED Chair Powell announced that he still expects the FED to cut U.S. interest rates 3 times (75 bps) this year. This went against investor expectations as it is not clear as to whether the inflation battle has been won. Markets reacted well to this news, with stocks and gold making moves higher.
Thursday 21st March, SNB Interest Rate Decision:
In a surprise move, the Swiss National Bank became the first major bank to cut interest rates. The bank cut its deposit rate by 0.25% to 1.5%. This was a move that was not in line with expectations and one that was welcomed by investors.
