Gold Inches Higher Ahead of Key CPI Reading Next Week

It was a week of range trading for most asset classes ahead of the key US April CPI report next week. Gold bulls were fine with that as the precious metal snapped a two-week losing streak, closing modestly higher on Friday. For now, investors are hamstrung by multiple different factors including a strong Dollar Index (DXY) and persistent inflation. 

Equities seem exhausted even as the Dow Jones rose for an eighth consecutive session on Friday. Much of the Dow 30’s momentum revolves around a rotation from sectors like semiconductors to more stable ones like energy, utilities, and precious metals. The S&P 500 continues to meet overhead resistance around the 5200 level although did manage to close above it on Friday. This sets stocks up for an interesting week ahead. It will be headlined by the April CPI report but also the May OPEX week and of course, first-quarter earnings from NVIDIA (NASDAQ: NVDA). 

The message from the Federal Reserve continues to be mixed. In the fact of stubborn inflation, Fed Chairman Jerome Powell reiterated once again this week that interest rate cuts are on the table. Despite this, other members of the Fed including Governor Michelle Bowman and President Neel Kashkari continue to have a hawkish tone and have stated that there is no need to cut rates if the economy is this strong. 

On Friday, the University of Michigan Consumer Sentiment Index came in lower than expected. The reading, which measures sentiment about current prices and perception of future inflation, came in at its lowest mark in six months. For now, most asset markets including gold and silver will be dependent on the Fed. While CPI and PPI numbers come out next week, the Fed has previously stated that it considered the PCE report a more accurate measure of inflation. Fed Chairman Powell will also be speaking from Amsterdam next week and investors of all assets will be listening for his tone. 

For the week, Gold COMEX June 2024 futures contracts closed at $2,366.90 and Silver COMEX July 2024 futures contracts settled at $28.395. 

Precious Metals Stocks and ETFs Weekly Performance

Gold mining stocks rebounded nicely this week, with the Kitco MIGL Gold Miners Index popping higher by about four basis points. Despite the strong weekly performance, only 9 of the 20 components of the MIGL index were green on Friday. Although all three major indexes closed higher, stocks fell from the open after the University of Michigan Consumer Sentiment report came in at a six-month low. 

Gold bulls were bidding options for names like Gold Fields (NYSE: GFI) which saw January 2025 call sweepers for the $15.00 strike price on Friday. We also saw significant buyers of May 24th call options in the SPDR Gold Trust (NYSEARCA: GLD) and sellers of the $31.00 put options for June 2025 on the Van Eck Gold Miners Index ETF (NYSEARCA: GDX). Put sellers are an indication of a long-term bullish stance and are willing to buy the asset at lower prices. 

Shares of Freeport-McMoran (NYSE: FCX) and Barrick Gold (NYSE: GOLD) added 0.96% and 0.89% respectively for the week. Both were outperformed by Newmont (NYSE: NEM) which gained 3.51% since Monday. 

The aforementioned Van Eck Gold MIners Index ETF (GDX) added 3.13% while the Van Eck Junior Gold Miners Index ETF (NYSEARCA: GDXJ) jumped higher by 4.2%. 

Spot gold ETFs also fared well after two weeks of consolidation. The iShares Gold Trust (NYSEARCA: IAU) and the SPDR Gold Trust (GLD) both added 1.6% for the week. 

The Kitco MISI Silver Miners Index rose by about nine basis points for the week although like with the MIGL Index, it pulled back on Friday. Only two of the index’s nine components closed higher on Friday. The iShares Silver Trust (NYSEARCA: SLV) gained a further 3.12% as silver continues to show strength and continues to trade near its 52-week high price.

What’s in Store Next Week for Precious Metals?

As mentioned, next week all eyes are once again on the Feds as a plethora of inflation data will be released. The PPI and CPI headline the week as well as a speech from Fed Chairman Powell. Equities investors will be watching how the market reacts to NVIDIA’s quarterly report as well.

Protect yourself! Buy and store gold now!