Gold Edges Higher Despite Being Overshadowed By Tech Stock Rally
Gold prices inched higher for the week although most safe haven assets were overshadowed by the massive tech stock rally following another blowout quarter from NVIDIA (NASDAQ: NVDA). The price of futures continues to hold strong and with each passing week that $2,000 level of support gets more fortified.
Another factor continues to be the Fed’s hesitancy to commit to a concrete date for rate cuts. At the start of the year, many considered March to be the most obvious choice but hotter-than-expected inflation data has pushed the highest odds for the first cut to July. This is in line with Fed Chairman Powell stating that he anticipates only three rate cuts this year.
Next week, we get the core PCE reading which should tell us how accurate the CPI reading was from earlier this month. The core PCE continues to be the Fed’s preferred measure of inflation and should have an impact on both gold and the equities markets. For the week ending February 23rd, Gold COMEX April 2024 futures contracts settled at $2,045.80.
While most investors are drooling over AI stocks, most central banks have been prudent with their purchases. Many of them have been stockpiling gold which has helped to keep the price stable. The Australian Central Bank anticipates that this trend should continue for the next six years which should push gold to new all-time high prices in the near future.
Precious Metals Stocks and ETFs
The MIGL Gold Miner’s Index rose again this week as we continued to see a sector rotation from red-hot tech stocks to value industries. On Friday, we saw 15 of the 20 components of the MIGL close the day in the green. Leading the way were major gold miners like Agnico-Eagle Mines Ltd (AEM), New Gold Inc (NGD), and Alamost Gold Inc (AGI).
Both the Van Eck Gold Miners ETF (GDX) and the Van Eck Junior Gold Miners ETF (GDJX) rose this week, posting gains of 0.34% and 0.81% respectively. The SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) both posted solid weeks as both spot gold ETFs rose by about 1.9%. Despite the recent gains made by these funds, they have still returned a modest loss of about 1.0% in 2024.
Silver prices dipped this week despite silver mining stocks posting another strong performance. The MISI Silver Miners index rose higher with all nine components closing Friday’s session in positive territory. Silver COMEX March 2024 futures contracts settled the week at a price of $22.975, down about $0.50 from last week.
What’s in Store Next Week for Precious Metals?
More inflation data in the form of the PCE and core PCE index readings for January. On Friday, the first of February’s economic data is released including the ISM manufacturing index and the final consumer sentiment reading for the month.
Keep an eye out for a number of Fed speakers next week. Recent hawkish rhetoric has put a dampening on equities markets, particularly as hopes for an early rate cut are dashed.