Gold Prices Slump on Friday After Hitting New All-Time High

Gold bulls have reason to celebrate after the precious metal once again hit a fresh new all-time high this week. It is unusual to see gold so bullish when equities, the US dollar index, and Bitcoin are all trading near all-time highs. Much of the bullishness across the various markets came when the Fed announced its latest interest rate plans on Wednesday. 

Fed Chairman Jerome Powell released the FOMC’s latest dot plot for the rest of the year. Investors were relieved to see that the Fed is still planning for three rate cuts by the end of the year which should see about 75 basis points shaved off of the current rates. This was a welcome announcement for most markets including gold which benefits from a lower interest rate environment. 

Gold pulled back on Friday alongside the equities market as the US Dollar Index broke through previous resistance on its chart. This, combined with weakness in rival currencies like the Euro and the Sterling saw the US Dollar close the week stronger. Thus, the all-time high price for gold futures was short-lived as the strong US dollar weighed on other assets. The S&P 500 and the NASDAQ also closed Friday in the red as stocks cooled off from their post-FOMC rally. 

The bottom line right now is that the health of the US economy remains in question. Macro analysts continue to question the need for rate cuts if the economy is thriving as the Fed implies it is. Historically, interest rate cuts have been used when economies have been struggling to try to alleviate pressures on the consumer. This uncertainty has been favourable for gold bulls as it has maintained demand for the precious metal as a hedge against potential upcoming volatility. 

For the week, Gold COMEX April 2024 futures contracts settled at $2,166.50 which is higher than last week’s close by about $7.00. This is after they hit an intra-session all-time high price of more than $2,220 per ounce. 

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Precious Metals Stocks and ETFs Weekly Performance

It wasn’t a great end to the week for gold mining stocks as 16 of the 20 MIGL Gold Miner’s Index components were in the red on Friday. The all-time high gold price didn’t move the needle much for these stocks as major components like Barrick Gold (NYSE: GOLD) and Agnico Eagle Mines (NYSE: AEM) still posted weekly losses. 

It has been a relatively steady decline for the index after the recent peak that formed earlier in March. Once again, it is likely that the dollar's strength weighed on gold mining stocks similar to spot gold futures. 

Not surprisingly, the Van Eck Gold Miners ETF (GDX) and the Van Eck Junior Gold Miners ETF (GDJX) both posted losses as well. GDX fell by 0.77% for the week while GDJX dropped by 1.77% since Monday. Spot gold ETFs fared a little better as they directly track the price of gold futures contracts. The iShares Gold Trust (IAU) and the SPDR Gold Shares (GLD) both posted modest gains for the week. 

Similar to gold, the price of silver was also negatively impacted by the stronger US dollar this week. On Friday, seven of the nine components of the MISI Silver MIners Index were trading below water. Spot silver prices took a dive this week and it was reflected in the performance of the iShares Silver Trust ETF (SLV) which fell by nearly 2.5%. Silver COMEX May 2024 futures contracts settled the week at $24.84.

What’s in Store Next Week for Precious Metals?

All eyes will be on the US dollar index next week and if it continues to break out. Further upside from the greenback could put more selling pressure on equities and precious metals. 

It is a holiday-shortened week next week as the markets will be closed on Friday for Good Friday. Still, Fed Chairman Jerome Powell is set to speak following the release of the February PCE and Core PCE Index readings.