U.S. Data Lifts Gold Despite Iran Deal Doubts, While Silver Output Surges
U.S. economic data is supporting gold even as optimism over an Iran deal fades, while silver production surges and demand rebounds from June lows.
Fresh U.S. economic figures are propping up gold price even as optimism around an Iran agreement fades, while silver production is climbing sharply as demand bounces off last month's troughs.
In their latest note, the analysts from Heraus observed that gold held firm last week. They cautioned that uncertainty still clouds any potential deal regarding the Strait of Hormuz, with oil supply through the waterway is still somewhat low from the beginning of July, and stockpiles steadily shrinking. Crude prices, however, remain well above $80 per barrel.
The WTI and Brent price spread stood near $6 per barrel by August 17, wider than the roughly $4 gap when Washington floated a possible deal on August 5, a sign the odds of imminent agreement have slipped. Still, the spread had frequently topped $10 earlier in the conflict, suggesting markets are now pricing in a rosier geopolitical outlook than they did between the last few months.
Heraeus sees the recent data as somewhat favorable for precious metals. Alongside weak payrolls, U.S. CPI from last week came in at 3.4% and PPI at 4.7%, at or below estimates. The result was a roughly 20-basis-point drop in the two-year Treasury yield, while the possibility of a September Fed rate hike tumbled from around 80% to about 35% from late-July highs.
If economic data from the U.S. remains favorable, it's quite possible that gold and silver will make a comeback to their peak prices in the future.
Related assets: Gold, Silver, Palladium, Platinum