Gold Surges Through $2,400 as Volatility Returns to Wall Street
Gold Surges Through $2,400 as Volatility Returns to Wall Street
Precious metal bulls continue to bet on both gold and silver as volatility returns to Wall Street in a major way. It was the worst week of trading for the markets since January as all three major averages posted losing weeks, extending the recent correction since the start of April. On top of the season volatility, geopolitical tensions intensified in the Middle East. At one point on Friday, reports surfaced that Iran was imminently about to send missiles at Israel in retaliation. While those rumours cooled off throughout the day, the world is still on high alert heading into the weekend.
Gold prices skyrocketed again this week, hitting a fresh new all-time high price of $2,448 per ounce. We might have seen a short-term top though as traders took some profits off the table as futures closed the session back below $2,400. After weeks of price discovery for gold, we could be heading into a short period of consolidation. Seasonally, gold has peaked in April. This recent rally likely has more to do with higher-than-expected levels of inflation in recent months.
Speaking of inflation, the CPI and PPI reports turned out to be relevant to the markets again. March CPI came in hot, with auto insurance and shelter accounting for a majority of the bump. The March PPI report came in cooler though, leading to a major squeeze in equities, although both gold and silver rallied alongside stocks on Thursday.
These results led to several Fed members stating that investors should expect higher-for-longer when it comes to interest rates. Interestingly enough, President Biden came out and addressed interest rate cuts on social media, stating that the cuts could be delayed by a month, but they are coming.
All in all, it’s been an interesting start to the second quarter, especially for precious metal bulls. Gold COMEX June 2024 futures contracts closed the week at $2,360.20 while silver COMEX May 2024 futures contracts settled at $27.97.
Precious Metals Stocks and ETFs Weekly Performance
It was another strong week for gold stocks aside from Friday when most companies closed the day underwater. The MIGL gold miners index was deep in the red on Friday with 18 of its 20 components closing lower. Larger constituents like Barrick Gold (NYSE: GOLD) and Agnico-Eagle Mines (NYSE: AEM) closed down 1.0% and 0.36% respectively on Friday. Freeport McMoran (NYSE: FCX) also saw a down week, falling by 1.10%. Despite the down week, FCX is still up nearly 14% over the past month.
Gold ETFs had a promising week until Friday when they gave up most of their gains. The Van Eck Gold Miners ETF (NYSEARCA: GDX) and the Van Eck Junior Gold Miners ETF (NYSEARCA: GDJX) fell by 1.26% and 0.99% respectively this week. Spot gold ETFs had a better performance as both the iShares Gold Trust (NYSEARCA: IAU) and the SPDR Gold Trust (NYSEARCA: GLD) hit new all-time highs earlier in the week.
Silver stocks followed the same path as gold miners this week as the MISI Silver Miners index saw 8 of its 9 components in the red on Friday. While the iShares Silver Trust (NYSEARCA: SLV) didn’t quite match its 8.0% gains from last week, it still posted positive gains. SLV added 1.14% and hit a new 52-week high price on Thursday. During the dip on Friday, options flow showed bullish institutions stepping in and bidding SLV with call sweepers for later this year.
What’s in Store Next Week for Precious Metals?
We could see a bit of a consolidation week for both gold and silver after their recent rallies. Wall Street will be focusing on major earnings from banks and companies like Taiwan Semiconductor Manufacturing, UnitedHealth, and Netflix. If we do see more volatility in equities, gold and silver could continue to catch a bid heading into April OPEX week.