Gold Surges as U.S. Core PCE Inflation Data Exceeds Expectations (Week Ending 5.31.24)

Anthony Anderson

Updated: May 31, 2024

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A Daily Journey Through the Week's Market

Monday - 5.27.24: US markets closed - Memorial Day

Tuesday - 5.28.24: Gold and silver prices are higher in early U.S. trading Tuesday, with silver sharply up due to bullish outside-market forces. Silver's strong gains are attributed to stronger Chinese demand and reports highlighting global metal demand challenges, such as a University of Michigan study underscoring insufficient copper production for electric vehicles.

Wednesday - 5.29.24: Gold prices rose to $2360.73, up $9.76, and silver climbed to $32.16, up 53 cents on Tuesday, driven by a weaker U.S. dollar, strong Chinese demand, and supply constraints in key metals. Persistent inflation and high interest rates also supported safe-haven demand for precious metals.

Thursday - 5.30.24: Gold prices are rallying, trading at $2,343.81 an ounce, up 0.25%, following worse-than-expected labor market data showing initial jobless claims rising to 219,000 for the week ending May 25, slightly above the forecasted 218,000. The four-week moving average increased to 222,500, and continuing jobless claims rose to 1.791 million. This data suggests a weakening labor market, influencing the Federal Reserve's monetary policy and driving investors toward safe-haven assets like gold.

Friday- 5.31.24: Gold and silver prices rose modestly in early U.S. trading Friday following a key U.S. inflation report that aligned with market expectations. August gold was up $7.20 at $2,373.80, while July silver increased by $0.116 to $31.645. The April personal income and outlays report, closely watched by the Federal Reserve, showed the PCE price index up 2.7% year-on-year, matching market expectations. The core PCE price index rose 2.8% year-on-year, slightly above the forecast of 2.7%. Asian and European stock indexes were mixed overnight, with U.S. stock indexes indicating modestly higher openings.

Gold Surges as U.S. Core PCE Inflation Data Exceeds Expectations

Gold prices surged to session highs after the U.S. Department of Commerce reported that the core Personal Consumption Expenditures (PCE) price index rose 0.2% in April, surpassing the expected 0.3% increase. Annual core PCE remained steady at 2.8%, while headline inflation matched expectations at 2.7%. This positive inflation report led to a rally in the gold market, with spot gold reaching $2,350.16 before settling at $2,346.71 an ounce. The Federal Reserve continues to navigate a challenging economic landscape with persistent inflation and weakening economic activity, potentially favoring gold as an investment. The report also highlighted mixed consumer data, with personal income rising 0.3% and personal spending increasing 0.2%, both aligning with or slightly below expectations.

Silver Surge: Energy Transition Fuels Price Hike

A significant imbalance in silver supply and demand driven by the global energy transition is pushing silver prices higher. Experts highlight that silver's critical role in clean energy technologies, such as solar panels and electric vehicles, is driving demand up while supply remains stagnant. This trend, coupled with lower interest rates and increased investment demand, is expected to result in much higher prices for silver bullion and equities throughout 2024. Investors should brace for continued price increases as silver's importance in industrial applications grows.

Trump Convicted: A Historic Verdict with Major 2024 Implications

In a historic first, former President Donald Trump has been found guilty on all 34 felony charges in his New York trial, making him the first U.S. president ever convicted of a crime. The charges stem from falsifying business records related to a 2016 hush money payment to Stormy Daniels. With sentencing set for July, just days before the Republican National Convention, this verdict throws the 2024 presidential race into uncharted territory. Trump’s legal woes raise profound questions about his campaign’s viability and the broader implications for American democracy.

Central Banks Drive Gold Market Rally Amid High Demand

Gold prices, currently facing resistance around $2,400 an ounce, are unlikely to see a major correction soon due to strong central bank demand and robust interest from Chinese retail investors. Experts note that central banks are strategically buying on price dips, and this consistent demand supports gold prices. Additionally, the Federal Reserve's current stance on interest rates keeps gold as a preferred safe-haven asset. Meanwhile, silver prices are also benefiting from industrial demand, particularly in sectors like solar power and electronics, trading near an 11-year high above $32 an ounce.

Legal Controversies: Trump’s Battles Compared to Nixon’s Downfall

The legal challenges facing former President Trump have sparked a debate reminiscent of Nixon's Watergate scandal. Some argue that these legal actions are politically motivated, aiming to undermine Trump and his allies. Critics contend that many of the charges lack constitutional basis and are designed to intimidate Trump supporters, including figures like Peter Navarro and Rudy Giuliani. This perspective suggests a broader strategy to dissuade political dissent and protect the establishment. The unfolding events raise significant questions about the impact of such legal battles on the integrity of the justice system and the political landscape.

Global Debt Concerns: Navigating the $315 Trillion Crisis

The global debt has reached an alarming $315 trillion, raising concerns about potential financial instability. Delinquency rates are climbing worldwide, indicating stress within the financial system. Various geopolitical tensions, such as the potential Chinese invasion of Taiwan and ongoing conflicts in Ukraine and the Middle East, add layers of uncertainty. Additionally, natural disasters and pandemics could exacerbate these issues. Experts warn that these factors combined could disrupt the global economy, suggesting a need for cautious optimism and preparedness for possible turbulence ahead.

Economic Impact: The Role of Central Banks in Financial Instability

Central banks' monetary policies are facing criticism for destabilizing global economies. By flooding markets with cheap money and maintaining low interest rates, they have contributed to rising prices, the formation of financial bubbles, and increasing inequality. These actions have diminished the value of savings, made housing less affordable, and escalated government debt. Critics argue that these policies primarily benefit the wealthy, leaving the average person struggling financially. This perspective highlights the significant role central banks play in current economic challenges, suggesting a need for reevaluation of their strategies to ensure broader financial stability and equity.

Global Financial Shift: BRICS Expansion and the Dollar's Future

The upcoming 2024 BRICS summit highlights growing challenges to the Western dollar-based financial system. Thailand and Venezuela have announced plans to join the BRICS coalition, which is focused on de-dollarization and reducing Western economic dominance. This expansion signals the increasing influence of BRICS, which aims to reshape global economic dynamics and lessen reliance on the dollar. As more countries express interest in joining, the BRICS alliance's growth marks a significant shift in the global financial order. Experts suggest that Americans should consider safeguarding their wealth, possibly through investments like gold, to mitigate the potential impacts of de-dollarization on the dollar's value.

Next Week’s Key Events

Monday, June 3

● 9:45 am: S&P Flash U.S. Manufacturing PMI (May)

● 10:00 am: ISM Manufacturing (May)

Tuesday, June 4

● 10:00 am: JOLTS (April)

Wednesday, June 5

● 8:15 am: ADP Employment (May)

● 9:45 am: S&P Flash U.S. Services PMI (May)

● 10:00 am: ISM Services (May)

Thursday, June 6

● 8:30 am: Initial Jobless Claims (June 1)

Friday, June 7

● 8:30 am: U.S. Jobs Report (May)

● 3:00 pm: Consumer Credit (May)


S&P Flash U.S. Manufacturing PMI: A strong PMI could signal economic growth, potentially leading to a decrease in gold and silver prices as investors move towards riskier assets. Conversely, a weak PMI could increase demand for safe-haven assets like gold and silver.

ISM Manufacturing: Similar to the PMI, strong ISM manufacturing data indicates economic strength, possibly reducing gold and silver prices. Weak data can drive investors to precious metals as a hedge against economic uncertainty.

JOLTS: High job openings can suggest a robust labor market, which might lead to reduced demand for gold and silver. If job openings are lower than expected, it might increase the appeal of precious metals.

ADP Employment: Strong employment numbers from ADP can lead to expectations of economic growth, reducing the demand for gold and silver. Weak employment figures can drive investors to these safe-haven assets.

S&P Flash U.S. Services PMI: A strong services PMI suggests economic expansion, potentially lowering gold and silver prices. Weak data can increase demand for precious metals as a safe investment.

ISM Services: Similar to the services PMI, strong ISM services data indicates a healthy economy, which can lead to a decline in gold and silver prices. Poor performance in the services sector can boost demand for precious metals.

Initial Jobless Claims: Higher-than-expected jobless claims can signal economic trouble, increasing the demand for gold and silver. Lower claims suggest a stronger labor market, which might reduce the appeal of precious metals.

U.S. Jobs Report: A strong jobs report typically leads to lower gold and silver prices as it indicates economic growth. A weak jobs report can increase demand for precious metals as a safe haven.

Consumer Credit: Rising consumer credit can indicate higher consumer spending, potentially reducing the appeal of gold and silver. If consumer credit growth is slow, it might signal economic weakness, increasing the demand for precious metals.

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