Gold prices soared above the $2,400 mark on Thursday morning as better than expected jobless claims data and continued stocks rally on Wall Street helped ease fears the country was dipping into a recession.
Meanwhile, the downside of owning the yellow metal was blunted by escalating tensions in the Middle East and a bullish outlook by traders that the Fed will move to reduce interest rates by at least 50 basis points in September, followed by at least another aggressive cut later this year.
The yellow metal had already gained more than 1.4% in early Thursday trading, up $33.29 at $2,418 per ounce. On Wednesday, gold snapped a four-session losing streak to pare losses from a broad sell-off on Wall Street earlier in the week that spilled over to precious metals. Silver also got a long sought-after shot in the arm, rising more than 3% as the white metal rallied $0.80 to trade at $27.45 per ounce.
One of the major drivers of the morning was a better-than-expected Department of Labor report showing seasonally adjusted initial unemployment claims at 233,000 for the week ending Aug. 3 – a decrease of 17,000 from the previous week’s level, which was revised up by 1,000 from 249,000 to 250,000. The figure beat Wall Street estimates of 240,000.
Additionally, the U.S. Census Bureau reported that wholesale inventories for June came out to $903 billion, up 0.2% from the revised May level of 0.5%. Total inventories were up 0.1% from the revised June 2023 level, while the May to June percent change was unrevised from the advance estimate of up 0.2%, the data found.
Wall Street, meanwhile, notched another day on the comeback trail after recession fears caused stocks to plummet by more than 1,000 points to begin the week. The Dow Jones Industrial Average gained more than 550 points, and the S&P 500 index was up by more than 1.5%.
Two key factors – ongoing geopolitical uncertainty and imminent interest rate cuts – also helped to insulate gold and silver from volatile trading.
With the Israeli-Palestinian conflict in the Middle East threatening to become a powder keg, the commodities’ safe haven appeal remained attractive. Traders have also priced in a 50 basis-point interest rate cut by the Fed when policymakers next meet in September, as well as two additional trims by the end of 2024, per the CME FedWatch tool.
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