Posted on August 12, 2024 by IBV GOLD Editorial Team
The global market meltdown touched off on Aug. 2 by a dismal U.S. jobs report continued to pound the market through most of last week. Recession fears sent The Dow Jones Industrial Average into a nosedive last Monday with a loss of more than 1,000 points and chomped 3% out of the S&P 500 for its worst trading day in almost two years. Precious metals weren’t immune to the fallout, either, as gold and silver lost as much as 3% and 4.5%, respectively, on the day and were left playing catch-up for the rest of the week. Wall Street caught a break on Thursday with a better-than-expected Department of Labor report showing a decrease in seasonally adjusted initial unemployment claims. Meanwhile, bullion investors remained confident the Fed would move to lower interest rates by September, and simmering geopolitical tensions in the Middle East reinforced the safe-haven appeal for gold and silver.
GOLD & SILVER:
After shedding as much as 3% during last Monday’s market collapse, gold made a slow recovery throughout the week, hovering around the $2,400 per ounce level. The yellow metal was still on track to post its biggest weekly decline since early June, however, trading at $2,428 per ounce on Friday afternoon.
Unlike its yellow cousin, silver wasn’t able to recover as quickly from Monday’s market sell-off and struggled throughout the week. After gaining more than 3% on Thursday, the precious metal limped into Friday’s market close, trading at $27.43 per ounce, down $0.12.
Two market forces continue to insulate both precious metals and present a near-term upside – geopolitical uncertainty in the Middle East and continued optimism among traders that federal policymakers will move to cut interest rates by September.
THE FED SAID:
Last week’s market collapse amplified concerns from the Fed’s loudest critics on Wall Street that policymakers waited too long to cut interest rates. Some analysts and economists even called for officials to step into the fray before their next meeting in September to make an emergency cut or risk the economy slipping into a recession.
Not so fast, said Richmond Federal Reserve President Tom Barkin. Speaking last Thursday on a National Association of Business Economists webcast, Barkin pushed back against calls to hastily intervene, saying the overall economy and labor market continued to show strength. Adopting a wait-and-see approach also gives the Fed more time to study critical economic data – like this week’s Consumer Price Index – that could guide officials in determining when to trim interest rates and by how much.
“You’ve got some room to see more on the labor side; you’ve got room to see more on the inflation side,” Barkin said. “It made sense to me to take the time and learn whatever we learn over the next seven weeks.”
BEAT THE STREET:
There will be plenty of data for investors to gauge whether the Aug. 2 shock jobs report that touched off recession fears and a massive sell-off on Wall Street last week was a fluke or a deeper sign of economic distress. The week kicks off with Monday’s snapshot of the monthly U.S. federal budget for July. The National Federation of Independent Business optimism index is due Tuesday, along with July’s Producer Price Index and core PPI. On Wednesday, both the Consumer Price Index and core CPI are scheduled. A packed release schedule on Thursday includes initial jobless claims, data on U.S. retail sales, industrial production, and business inventories. A focus on the housing sector – which has been dragged for months because of sticky inflation – is expected Friday, with figures on housing starts, building permits, and homebuilder confidence. Additionally, a preliminary estimate of consumer confidence for August rounds out the day’s agenda.
GOLD RUSH:
It’s possible the next great mining frontier for precious metals isn’t even on this planet. Scientists and private companies have been closely observing a NASA space mission launched last October to 16 Psyche, a metal-rich asteroid situated between Mars and Jupiter that was discovered in 1852 by Italian astronomer Annibale de Gasparis. Layered with enormous deposits of gold, platinum, and nickel, the asteroid is estimated to be worth a jaw-dropping $100,000 quadrillion. NASA’s exploratory spacecraft is expected to reach 16 Psyche by 2029 and will have traveled nearly 1.4 billion miles. While the technology of space mining is still in its infancy, it poses plenty of ethical, environmental, and economic questions for the future. “We’re launching a mission to an object that humankind has never before studied up close,” said Lindy Elkins-Tanton, Psyche’s principal investigator. “This will be our first time visiting a world that has a metal surface. There aren’t that many completely unexplored types of worlds in our solar system for us to go see, so that is what is so exciting about this.
Disclaimer: All Market Updates are provided as a third party analysis and do not necessarily reflect the explicit views of IBV GOLD. and should not be construed as financial advice.