Gold Edges Lower as Inflation Reports for January Come in Hot

The week was a bit of an eye-opener for investors who had grown accustomed to cooling inflation prints in the US economy. January’s CPI number came in hotter than expected with a 3.1% year-over-year growth compared to estimates of just 3.0%. It was lower on a sequential quarterly basis from December which printed a 3.4% CPI figure. Still, it was enough to spook the equity markets and send treasury bond yields back up.

Later in the week, January’s PPI numbers also came in hot with a 0.3% rise for the month compared to analyst estimates of just 0.1%. For comparison, December saw a decline of 0.2%. The University of Michigan Consumer Sentiment reading came in high as consumers remained confident in the state of the economy. The number came in at 79.6 for February which was slightly higher than January’s reading of 79.0. 

The markets are now pricing in three rate cuts by the Fed this year but lingering inflation continues to spook investors. Just this week, Japan and the UK both fell into a technical recession with contracting GDP for the quarter. Japan lost its spot as the third-largest economy in the world to Germany, another world power that has been battling recessionary pressure. 

Overall, gold prices were mostly unchanged for the week even with some weakness in stocks. Continued strength in the US dollar index continues to be a deterrent for gold investors and is likely putting a cap on its price. For now, gold futures continue to hold key support at the $2,000 price level. 

Gold COMEX April 2024 futures contracts settled the week at a price of $2,025.50. 

Precious Metal Stocks and ETFs 

The MIGL gold miner’s index saw a positive week although gave some of those gains back during Friday’s session. Eleven of the index’s twenty components closed the session in the green including Gold Fields Ltd ADR (GFI), Agnico-Eagle Mines Ltd (AEM), and Barrick Gold Corp (GOLD). With some weakness in tech stocks this week, we saw a healthy rotation to some value sectors and it appears that gold miners were the beneficiaries of some of that movement. 

Van Eck’s Gold Miners ETF (GDX) posted a modest loss of 0.07% for the week. Although things have settled in recent sessions, GDX is still sitting on losses of more than 12% so far in 2024. Van Eck’s Junior Gold Miners ETF (GDJX) lost about 0.83% for the week and is down by nearly 13% in 2024. Just as the other gold-related stocks and ETFs, the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU) were basically flat for the week. 

Silver continues to perform well and holds key support levels at $23.00. Silver miners were a mixed bag this week although the MISI silver miner’s index also posted a positive week. Silver COMEX March 2024 futures contracts gained 2.28% on Friday and settled the week at a price of $23.47. 

What’s in Store Next Week for Precious Metals?

Investors are reminded that all markets are closed on Monday for the President’s Day holiday. 

It is a key week for earnings on Wall Street and is led by the report from NVIDIA on Wednesday. This will certainly be a market-moving report. As well, we get a look into the consumer and strength of the retail economy with major reports from the likes of Walmart and Home Depot. We also get some important gold companies reporting including Rio Tinto plc and Gold Fields Limited. 

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