It was a volatile week for precious metals after what appeared to be a promising start on Monday. Gold ripped to a fresh new all-time high of $2,450.05 to start the week but then proceeded to sell off by more than $100 by Friday’s close. It was the worst pullback that gold has seen in eight months which speaks to how strong it has been trading this year. In all, gold fell by 5.0% from its all-time high price on Monday and by about 3.5% since last Friday’s close. 

What sent gold over the edge? The May FOMC minutes that were released on Wednesday were extremely hawkish. Many of the members were quoted as saying that interest rate cuts are not required with the current state of inflation. Higher for longer was the message which is inherently bearish for gold. 

FOMC members noted that the current economic data did not show that inflation was falling to its target rate of 2.0%. Some have even suggested further rate hikes might be necessary to cool inflation in the US economy. Traders are now pricing in just one rate cut for 2024 and many are coming to the realization that we may not see any until 2025. 

Just as with any asset class, gold’s parabolic run this year will need to cool off at some point. Analysts are pointing to a seasonally bearish time of year at the end of May for gold to re-test the support levels of $2,300 after it blew through what was previously an area of strong resistance. 

What’s next for gold? The hawkish sentiment from the Fed should continue to weigh on the asset’s price. Despite strong demand from Central Banks and Asia, gold is due for a cooling-off period. This is not to say the price is no longer in a bullish uptrend, but rather the gold market needs to digest the macroeconomic landscape before continuing to push to new all-time highs. 

For the week, gold COMEX June 2024 futures contracts closed at $2,335.20. Silver COMEX July 2024 futures contracts settled at $30.54 and Copper July 2024 contracts settled at $4.759. 

Precious Metals Stocks and ETFs Weekly Performance

As you might expect, the dramatic sell-off for gold hit gold miners and gold ETFs as well. The Kitco MIGL Gold Miners Index lost nearly ten basis points and was in free-fall for most of the week. The index saw some relief on Friday when the markets rose higher ahead of the Memorial Day long weekend. On Friday, 17 of the 20 components were in the green, led by Ned Gold (NYSE: NGD), Seabridge Gold (NYSE: SA) and Eldorado Gold (NYSE: EGO). 

We finally saw a pullback for some of the hotter mining stocks. Newmont Gold (NYSE: NEM) slipped by 4.37% and Freeport-McMoran (NYSE: FCX) dropped by 4.4%. FCX was heavily impacted by both gold and copper futures dropping lower during the week. The stock also saw continued heavy bullish option flow through the end of the year. The all-time high price of around $65.00 is in play in 2024. Copper should continue to see bullish price action as data center growth continues to be a main driver of new technologies. 

Also not surprisingly, the Van Eck Gold Miners Index ETF (NYSEARCA: GDX) and the Van Eck Junior Gold Miners Index ETF (NYSEARCA: GDXJ) slumped by more than 4.0%. Investors shouldn’t have too much to complain about as the two ETFs are up by 15% and 19% respectively so far in 2024. 

Spot gold ETFs also fell as the iShares Gold Trust (NYSEARCA: IAU) and the SPDR Gold Trust (NYSEARCA: GLD) both lost 3.5%

The Kitco MISI Silver Miners Index lost eight basis points for the week but slightly recovered on Friday. Eight of the nine components of the MISI were green on Friday, led by Fortuna Silver Mines (NYSE: FSM) and Avino Silver & Gold (NYSE: ASM). The iShares Silver Trust ETF (NYSEARCA: SLV) lost 4.0% for the week but remains up by nearly 30% year-to-date. 

What’s in Store Next Week for Precious Metals?

With the Fed’s sentiment dictating the markets right now, all eyes will likely be on the CPE and Core PCE reading for April which will be released on Friday. On Thursday, we’ll also get the US Q1 GDP report and the pending home sales and weekly jobless claims reports. 

Monday is the Memorial Day Holiday in the United States which means most markets will be closed. 

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