Gold prices are regaining strength, climbing back toward session highs after U.S. pending home sales data showed a significant 5.5% decline in July. Meanwhile, silver is also on the rise, supported by escalating geopolitical tensions and a recent high-grade discovery at Vizsla Silver Corp.'s Copala Central project. Today’s market sentiment is shaped by a mix of weak economic indicators and increased demand for safe-haven assets.
Gold Prices Recover Amid Weak U.S. Data: GDP Beats, Pending Home Sales Fall
Gold prices fell nearly 1% earlier this week, settling around $2,500 per ounce due to the strengthening U.S. Dollar. However, the precious metal is showing signs of recovery following a slew of disappointing U.S. economic data releases. The U.S. Preliminary GDP for Q2 exceeded expectations at 3.0%, but other indicators were less favorable.
Notably, the U.S. Pending Home Sales dropped by 5.5% in July, a stark contrast to the expected 0.2% increase. Additionally, weekly Unemployment Claims came in slightly lower than expected at 231,000.
These mixed economic signals have led to speculation that the Federal Reserve may need to reconsider its approach to interest rate cuts. The CME FedWatch Tool currently suggests a 34.5% probability of a more aggressive rate cut in the Fed's upcoming meeting, which could weaken the U.S. Dollar and further bolster gold prices.
Key Economic Data:
- Preliminary GDP (Q2): 3.0% vs. expected 2.8%
- Unemployment Claims: 231,000 vs. expected 232,000
- Pending Home Sales: -5.5% vs. expected 0.2%
Silver Rises to $29.50 as Vizsla Silver Corp Boosts Demand
Silver is trading near $29.50, benefiting from its dual role as both an industrial and precious metal. The metal’s outlook is further boosted by geopolitical developments, particularly in the Middle East, where tensions continue to rise. Investors are turning to silver as a safe-haven asset, driven by fears of escalating conflict between Israel and Hezbollah. This geopolitical uncertainty has led to cautious optimism around silver prices.
Additionally, Vizsla Silver Corp.'s recent discovery of high-grade silver and gold at its Copala Central project in Mexico has sparked investor interest. The company reported that the ongoing drilling program has confirmed significant mineral deposits, enhancing market confidence and potentially driving silver prices higher in the near term.
Geopolitical Influence:
- Middle East Tensions: Boosting demand for safe-haven assets like silver.
- Vizsla Silver Corp.: High-grade discovery at Copala Central is expected to support prices.
Outlook: Economic Data and Geopolitical Risks in Focus
Looking ahead, tomorrow’s economic calendar is packed with key events that could significantly impact the precious metals market:
- Core PCE Price Index (12:30 PM): This is the Federal Reserve's preferred inflation measure, expected to rise by 0.2%. Any deviation from this figure could sway Fed policy expectations and affect gold and silver prices.
- Chicago PMI (1:45 PM): With a forecast of 45.0, slightly below the previous 45.3, this measure of manufacturing activity will offer insights into the health of the U.S. economy, potentially influencing market sentiment.
- Revised UoM Consumer Sentiment (2:00 PM): Expected to tick up slightly to 68.0 from 67.8, this metric will provide a gauge of consumer confidence, which can impact spending and, by extension, the broader economy.
Traders and investors will be closely monitoring these reports to gauge the potential direction of the Federal Reserve’s monetary policy, which will be critical in determining the next moves for gold and silver.