Gold and Silver Prices Experience Modest Increases Ahead of Major U.S. Data Release

Precious metals trend slightly ahead this week, continuing to hold their ground from previous gains, as we await further news on the U.S. economic situation. With June underway, analysts expect to see a large release of U.S. economic reports shortly, which will significantly impact investment performance rates across all sectors. With this anticipation, both gold and silver saw price increases Thursday as investors awaited the results.

Gold last gained $2.70 per ounce, reaching $1,984.70, while silver increased by $0.028 per ounce, climbing to $23.615. The hefty U.S. economic report due soon should include the weekly jobless claims report, the ADP national employment report, the report on Challenger job cuts, revised productivity and costs, the global and U.S. manufacturing PMIs, sales across domestic auto industries, the ISM report on business manufacturing, sales across monthly chain stores, the weekly DOE liquid energy stocks report, and construction spending.

U.S. job reports in the last few months gave gold excellent momentum. In March, the significant drop in non-farm payroll figures to 238,000, compared to February’s 311,000, allowed gold to reach a high of $2,046 per ounce. The price spike following that release signified a $232 gain in just five weeks.

Silver responded to March’s report in a similar way. After the 0.7% drop in factory orders, silver prices rose to $25.52 per ounce, displaying a 20% increase in price in the five-week span.

The same results occurred after the Job Openings and Labor Turnover Survey (JOLTS) release in early May. The JOLTS survey showed a massive drop in job openings from the expected 10.4 million figure to 9.6 million. Along with this disappointment, the report revealed an increase in layover rates, a drop in factory orders, and a decreased ratio between job openings and unemployment.

The day after the JOLTS report came out releasing these economic declines, gold rallied from $2,033 per ounce to a momentary high of $2,066 per ounce, the highest price it’s hit all year.

Based on past events, it’s clear how precious metals respond to disappointing U.S. job reports. If the upcoming release shows anything like the last few months, gold and silver may respond in a similar way. The only question will be, by how much?

“We prefer gold as a buy in a portfolio context and forecast prices to touch USD 2,100/oz by end-December and USD 2,200/oz by end-March 2024,” UBS, a multinational investment bank and financial services company, weighed in.

Global stock markets remain mixed over the situation. Another large factor sits heavily on everyone’s minds as we await the report. Just days ago, the U.S. House of Representatives finally came to a decision on the long-awaited raised debt ceiling versus default debate between the Republicans and Democrats.

The government chose to extend the debt ceiling, though the measure still must go to the Senate to pass. Most expect that it will. The entire ordeal temporarily assuaged the marketplace after weeks of anticipation of a potential global recession if the U.S. defaults.

With the debt ceiling sorted out, all eyes are on the Labor Department’s employment report for May’s figures. Key expectations show the non-farm payrolls ringing in at 190,000, as opposed to April’s total of 253,000. Analysts expect another significant drop as it seems to occur each month.

According to the Wall Street Journal, we can expect a more confirmed statement from the Federal Reserve on the paused interest rate hikes during the June FOMC meeting. The Fed will likely hike rates again in late summer, though for now, analysts expect actions to hold true to Chairman Powell’s previous statements to “likely forgo an increase in its benchmark interest rate when it meets in June.”

Previously, most expected more interest rate hikes this June after a consistent quarter-point strategy for the last few months. While Powell may intend to pause rates, anything could change after the U.S. job report release, especially if it stirs up further issues.

The expected interest rate pause should be good news for precious metals. Gold and silver perform best with lower interest rates.

“Gold prices are expected to remain elevated as economic uncertainty and the possibility of the U.S. Fed stopping interest rate hikes keep the demand line ticking higher,” Prathamesh Mallya, the assistant VP of research, non-agri commodities, and currencies at Angel One, explained after gold spiked following the Fed’s last lower rate hike.

As always, investors should consult their financial advisors before making any portfolio decisions.

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