Gold and Silver Closed Lower as ECB Holds Rates
Spot gold dropped 1.98% to near $4,048 while silver tumbled over 3% on Thursday, pressured by Treasury yields that are going higher, and also after the ECB paused rate hikes.
Silver and gold prices retreated Thursday as climbing Treasury yields and strengthening fiat currencies outmaneuver flows to precious metals. When this article was published, gold price was trading around $4,048, a decline of 1.98% compared to 24 hours earlier. On the other hand, silver dropped over 3% to roughly $57.69.
Two macro catalysts drove the selling pressure. The European Central Bank held its rate steady at 2.25% following a June increase, emphasizing that uncertainty surrounding the energy issues, as well as geopolitics remains elevated. Meanwhile, U.S. jobless claims fell to 187K, which reinforces the narrative that U.S. layoffs are still somewhat controlled, even though hiring momentum cools.
The data left markets pricing the Federal Reserve's next July 29 meeting as a possible rate hold, rather than a dovish pivot, with oil-driven inflation risk keeping a late year's rate hike expectations alive. On the other hand, the 10-year Treasury yield advanced to 4.714%, as the DXY remained firm.
The geopolitical landscape also remains tense. The Strait of Hormuz is still having active conflicts, and Houthi strikes on Saudi oil tankers in the Red Sea have expanded the conflicts beyond Hormuz itself. Both WTI crude and brent oil prices have been going up significantly in the past 7 days.
Like always, the precious metals will depend a lot on these macro developments, and miner stocks may be even more dependent on them, since their operation costs will also depend on the oil prices that are directly affected by the conflits in Middle East.
Related assets: Gold, Silver, Crude Oil, Brent Crude