Gold Stays Steady as PCE Report Comes In Line With Market Expectations

It was a rather uneventful week for precious metals following the worst week of price action in more than eight months. Gold consolidated in a tight range and only surged higher on Friday following a soft PCE reading. Even that sudden burst was not enough to bring gold to positive gains for the week. The precious metal closed the month of May higher by about 2.0% and has still gained nearly 13% so far in 2024. 

The Personal Consumption Expenditures (PCE) reading for April came in 0.2% higher than April 2023, which was lower than analyst estimates of 0.3%. Core PCE rose by 2.8% which was unchanged from March and in line with expectations. While there certainly has been progress in recent months, inflation remains well above the 2.0% goal that the Federal Reserve is working towards. Fed President Bostic did comment on the current state of inflation and mentioned that the FOMC would monitor data and lower rates if needed even if the 2.0% goal has not been reached. 

Elsewhere, the Eurozone CPI for May came in at 2.6% which was hotter than the 2.4% that was expected. Chinese manufacturing for the month came in lower, suggesting that there continues to be a contraction in the Purchasing Manager’s Index (PMI). European and Asian markets were mixed to close the week on Friday. 

One interesting market-moving piece of data was the Chicago ISM Business Survey which came in well lower than expected. Equities tumbled on the news with the S&P 500 tagging its monthly low value area right at around $518.50 before a furious rally into the close. While bears were out celebrating, it was more likely than not an end-of-the-month rebalancing for major funds. There looks to be a sector rotation underway, as tech and semiconductor stocks were battered while other sectors like financials and biotech rallied into the close. 

Overall, Gold COMEX August 2024 futures contacts closed at $2,347.70 while Silver COMEX July 2024 futures contacts settled at $30.555. Copper also continued to pull back with July 2024 futures contracts settling at $4.6275. 

Precious Metals Stocks and ETFs Weekly Performance

It was a flat week for the gold mining sector, with the Kitco MIGL Gold Miners Index falling just two basis points. Miners had a rough close to the week with 14 of the 20 components of MIGL closing Friday in the red. It should be noted that some of the larger miners were able to post positive sessions including Agnico-Eagle Mines (NYSE: AEM) and Barrick Gold (NYSE: GOLD). 

Both Newmont Gold (NYSE: NEM) and Freeport-McMoran (NYSE: FCX) posted positive weeks, with the latter gaining 2.3%. FCX has benefited from both the gold and copper markets being hot this year and has held strong even as Copper and Gold futures slip. It helps that the stock was a major part of Stanley Druckenmiller’s latest quarterly update from his Duquesne Family Office portfolio. It was a nice recovery for both stocks following last week’s minor correction in the sector. 

The Van Eck Junior Gold Miners ETF (NYSEARCA: GDXJ) gained 1.46% for the week and outpaced the Van Eck Gold Miners ETF (NYSEARCA: GDX) by more than 1.3%. Spot gold ETFs posted modest losses which was in line with the overall market. Both the iShares Gold Trust (NYSEARCA: IAU) and the SPDR Gold Trust (NYSEARCA: GLD) fell by 0.77% during the holiday-shortened week. 

The Kitco MISI Silver Miners Index lost four basis points in a flat week for silver. Five of the nine components of the MISI closed underwater on Friday, although no stock fell by more than 1.5%. The iShares Silver Trust (NYSEARCA: SLV) fell by 0.54% for the week. 

What’s in Store Next Week for Precious Metals?

The markets will enter June on Monday, signalling the last few weeks of the first half of 2024. It’s been an interesting one for precious metals so far as they have seen a resurrection in demand during this uncertain period for the global economy. 

Next week, May economic data hits the tape with the ISM Manufacturing Index, the ADP Employment report, the ISM Services report, and the May US Employment report on Friday. 

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