Gold Prices Fall as Dollar Index Rallies Ahead of January CPI Print
Gold saw its largest movements of the week come during Monday’s trading session. The price of futures contracts saw a significant move downward as the US dollar index rallied for its best week in months. On top of that, the Fed’s continued hawkish stance on lowering interest rates and an impending CPI print for January next week also weighed on investors.
Many expect a continued decline of CPI and Core CPI readings in the United States next week. One indication of this came from China’s inflation figures which came in cooler-than-expected last week. This led to one of the strongest rallies in the Chinese stock market in recent memory.
Another reason why gold and other stores of value are struggling is because of the extreme risk-on sentiment that has been seen in equities and cryptos. Money is piling back into the stock market at an alarming rate, sending the S&P 500 to a record high on Friday, closing above the 5,000 basis point level for the first time in history.
Crypto markets have also been red-hot, with Bitcoin briefly touching above $48,000 on Friday, posting a single-day gain of more than 4.0%. As long as stocks and other risk-on assets like crypto are moving higher, it will certainly remove some of the lustre of investing in safe-haven assets like gold.
For the week, Gold COMEX April 2024 futures contracts fell slightly to settle at $2,038.70.
Precious Metals Stocks and ETFs
It was another week of weakness for gold stocks and gold miners in particular. With so much attention being placed on semiconductors and big-tech stocks, safe-haven sectors like gold miners have been neglected during this recent rally. More weakness was shown in the broader MIGL Gold Miners sector index, with weekly losses for companies like Barrick Gold (GOLD), Kinross Gold Corporation (KGC), and Eldorado Gold Corp (EGO).
Broader gold miner ETFs also suffered a second consecutive week of losses. Both the Van Eck Gold Miners ETF (GDX) and the Van Eck Junior Gold Miners ETF (GDXJ) fell by 2.03% and 1.80% for the week. Just as last week, the larger gold ETFs managed to eke out a modest gain. The SPDR Gold Trust (GLD) rose by 0.37% and the iShares Gold Trust (IAU) gained 0.39%.
Silver miners and futures contracts edged higher this week as the precious metal uncharacteristically diverged from the price action of gold. Silver COMEX March 2024 futures contracts settled the week at $22.67. Earlier in the week, a report came out that revealed that silver demand is expected to reach 1.2 billion ounces this year, which would be the highest in more than ten years. Some analysts at the Silver Institute believe that the price of Silver could hit as high as $30 per ounce by the end of 2024.
What’s in Store Next Week for Precious Metals?
All eyes will once again be on the CPI and Core CPI reading for January which will be released during Tuesday’s trading session. Later in the week, we will also see the PPI and Core PPI numbers. With it also being February OPEX week, the markets could be in for some near-term volatility.
We will also see some key earnings reports from precious metals companies like Barrick Gold, Royal Gold, and Kinross Gold.