Precious metals like gold and silver extended their stretch of gains last week. Gold prices climbed 1.5% to $1,905/oz while silver
popped 1.9% to trade around the $28.00-price level. This likely follows
sustained US Dollar weakness and headwinds faced by Treasury yields
owing to the Feds patiently dovish position on monetary policy. Outlook
for gold and silver has benefited from FOMC officials undermining the
taper debate as they argue recent inflationary pressures are “largely
transitory.”To get more news about
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With actual inflation rising in the near term but not enough to warrant a
Federal Reserve policy response, Treasury yields and the US Dollar have
turned lower. Gold price action has catapulted higher in turn. This
bullish trend behind gold looks likely to persist so long as the Fed
remains committed to its accommodative stance and continues to delay
talks of tapering asset purchases.
Gold prices might even be headed for all-time highs if the US Dollar
weakens further and Treasury yields extend their slide. Not to mention,
with major cryptocurrencies like Bitcoin facing heavy selling pressure
as of late, investors might look to more traditional anti-fiat assets
like gold and silver. If the US Dollar stages a sharp rebound, however,
it would likely correspond with a spike in Treasury bond yields caused
by the market pricing in the threat of Fed tapering. That could weigh
negatively on gold prices and spoil the recent rally.
Silver price action has also benefited from subdued Treasury yields and
US Dollar weakness. In fact, the most active front-month futures
contract for silver just recorded its highest weekly close since March
2013. Recent silver strength could come on the heels of President Biden
touting his $2-trillion ‘green’ infrastructure proposal and $6-trillion
budget forecast as well. Nevertheless, an upswing in yields and the US
Dollar would likely put downward pressure on silver prices.
Looking to the week ahead, gold and silver volatility might intensify
around high-impact event risk posed by the release of monthly nonfarm
payrolls. A notably better-than-expected jobs report could see the US
Dollar and yields pivot higher, which would likely steer precious metals
lower. On the other hand, gold and silver prices could benefit from
another round of disappointing NFP data as this would likely bolster the
argument for Fed doves.
