The week ahead: Thursday data could move precious metals

This week in precious metals is shaping to be slightly less dramatic than last week, which culminated with Federal Reserve Chairman Jerome Powell’s comments at the Jackson Hole economic symposium. His talk signaled strongly that rate cuts were on the horizon, leading to a small but noticeable jump in precious metals. Gold closed on Friday at $2,512.21 and Silver ended the day at $29.83.

Thursday is the day of the week

Thursday will be the day of new information, as the U.S. Department of Labor will announce initial jobless claims before market open each week. Gross domestic product, one of the broadest measures of economic activity, will also be released on Thursday before trading begins.

These releases could bring volatility to both the dollar and precious metals market.

The Fed has cited signs of a weakening job market as reasons for considering rate cuts as inflation data has improved over the past two years. Initial jobless claims have steadily been rising throughout 2024.

This chart shows initial jobless claim reports over the past year. A noticeable uptrend has been occurring since the turn of the new year.

The Federal Reserve has been attempting to balance its reaction to signs of a weakening job market with concerns about lingering, or sticky, inflation. The recent signal for cutting rates shows more concern with a weakening job market, meaning precious metals could be in for another rise as the Fed reinforces inflation fears are secondary.

Money is pouring in

Some analysts have criticized the Fed for its openness to lowering interest rates while precious metals, the stock market, crypto and the housing market are at all-time highs.

In the first half of August, more than $90 billion was inflowed into U.S. money market funds, showing institutional investors are preparing to deploy their assets away from fixed income in light of lowering interest rates.

This chart, made by @koeissiletter on X, shows a major increase in money hitting U.S. money market funds in the first half of August as investors begin preparing for interest rate cuts.

100% chance of rate cut in September

All eyes will be on the U.S. markets through the end of 2024. If the Fed’s interest rate cuts fail to help a reportedly weakening job market, and inflation rates rise at the same time, it could spell a disastrous combo for the global economy.

The markets are pricing in a 76% chance of a quarter-point rate cut at the Fed meeting on September 18 and a 24% chance of a half-point cut.

Earnings

Only one precious metals miner is expected to report earnings this week. Harmony Gold Mining Company ($HMY) is scheduled to release data before market open on Wednesday.