Gold and Silver Industry & Investing News
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The Truth About Gold Jewelry
Not all gold is created equal. Here's what you need to know about gold and silver jewelry.
READ MOREStress Tests Reveal Hundreds of U.S. Banks at Risk Due to Loans and Rate Hikes
Hundreds of small and regional banks in the U.S. are under financial stress, with 282 facing significant risks from commercial real estate loans and the effects of higher interest rates, according to a study by Klaros Group. While these banks, predominantly holding less than $10 billion in assets, are not nearing insolvency, their strained financial conditions could lead to a reduction in investments like new branches and technology, potentially impacting communities and limiting direct services to customers. Fitch Ratings' Christopher Wolfe and Klaros Group's Brian Graham emphasize that the risk is more about financial pressure than outright failures.
READ MOREGold Recovers After Fed Decision Golds Interest Rates Steady
Gold prices saw a modest recovery on Wednesday, climbing 0.9% to $2,306.80 per ounce, after the Federal Reserve opted to maintain its benchmark interest rate, which led to a slight retreat in both the dollar and U.S. Treasury yields. The unchanged rate and a weaker dollar made gold more attractive to investors using other currencies, contributing to the day’s gains. This rebound follows a recent dip in gold prices, influenced by diminished Middle East tensions and reduced expectations for early U.S. rate cuts, despite gold reaching a record high earlier in April due to robust demand from central banks and Chinese investors.
READ MOREDramatic Fluctuations for Yen as It Struggles Against Dollar Surge
The Japanese yen experienced dramatic fluctuations on April 29th, initially plummeting to a 34-year low of 160 against the dollar in early trading, only to rebound sharply later in the day. By the close of trading in Asia, the yen had recovered significantly, rising more than 2% to finish at 155 against the dollar. These swings highlight the ongoing challenges Japan faces in stabilizing its currency, which has seen a significant decline against the greenback over the past three years.
READ MOREU.S. Treasury to Initiate Securities Buyback, Holds Quarterly Debt Sale Steady
The U.S. Treasury has maintained its quarterly long-term debt issuance at $125 billion, while also announcing the initiation of its first buyback program in over two decades set to begin this month. These buybacks will involve 3-, 10-, and 30-year Treasuries. This decision follows three consecutive quarterly increases in note and bond sales, which reached record levels. The Treasury indicated earlier this year that no further increases are expected in the near future, and this stance was reiterated in their latest announcement. The easing of pressures on the Treasury is anticipated as the Federal Reserve may soon decelerate the reduction of its U.S. government securities holdings, a move expected by many market participants.
READ MOREMcDonald’s Reports Low-Income Consumers Struggling Amid Inflation
Major U.S. corporations, like McDonald's, are noting concerns about the financial strain on low-income consumers due to persistent inflation. Despite a slight slowdown in price increases since the Federal Reserve began hiking interest rates in early 2022, companies note that consumers are becoming increasingly cautious with their spending. McDonald's CEO Chris Kempczinski highlighted during an earnings call that elevated daily expenses continue to pressure consumers globally. This ongoing financial strain has contributed to a significant drop in consumer confidence, reaching its lowest point since mid-2022 as reported by the Conference Board.
READ MOREU.S. Private Sector Hiring Exceeds Expectations, Adding 192,000 Jobs in April
In April, private payrolls surpassed expectations, increasing by 192,000 jobs according to ADP, despite predictions of 183,000. This gain, although slightly lower than March's revised total of 208,000, underscores the U.S. labor market's ongoing strength. Additionally, wages rose by 5% year-over-year, marking a multi-year low, which contrasts with persistent inflation that has exceeded the forecasts of many economists and policymakers.
READ MOREPalladium Falls Below Platinum as Auto Industry Shifts Preferences
Palladium has fallen below platinum for the first time since February, reversing its long-standing price advantage. This shift reflects a weakening demand outlook for palladium, primarily used in gasoline-powered car catalytic converters, exacerbated by a shift in automaker preferences towards the relatively cheaper platinum amidst a broader economic recalibration since the Covid-19 pandemic. Meanwhile, platinum benefits from positive market projections and increased demand in plug-in hybrid vehicles, which use more platinum-group metals compared to traditional engines.
READ MORETreasury Yields Dip as Markets Brace for Fed Rate Decision
U.S. Treasury yields edged lower on Wednesday in anticipation of the Federal Reserve's upcoming interest rate decision and monetary policy guidance. The 10-year Treasury yield dropped by a basis point to 4.67%, while the 2-year yield fell by about three basis points to 5.019%, remaining just above the significant 5% threshold it surpassed on Tuesday. This movement highlights the inverse relationship between bond yields and prices, where each basis point shift represents a 0.01% change.
READ MORENYT: A Strong U.S. Dollar Weighs on the World
The U.S. dollar has strengthened significantly against virtually every major global currency this year, affecting nearly two-thirds of the 150 currencies monitored by Bloomberg. This shift, largely due to anticipations of Federal Reserve rate decisions amidst high inflation, has made U.S. assets more attractive and prompted a substantial influx of international capital into the U.S. This robust dollar, reaching heights last seen in the early 2000s, is having wide-reaching impacts from Brussels to Beijing and poses potential serious consequences for the global economy.
READ MORERich Retirees' Spending Could Keep Fed Rate Cuts at Bay
Despite expectations of economic tightening, Federal Reserve rate cuts appear unlikely as affluent Americans, particularly retiring baby boomers like Joan Harris, increase their discretionary spending. After retiring, Harris has significantly boosted her travel activities, indulging in more frequent and luxurious trips, including international destinations and first-class accommodations. Her newfound financial freedom, reflective of a broader trend among her demographic, supports continued consumer spending, which in turn sustains economic momentum and discourages rate reductions by the Fed.
READ MOREMcDonald's Faces Earnings Dip as Consumer Spending Tightens
McDonald's has reported a rare miss in quarterly profits, its first in two years, as it failed to meet analyst expectations due to budget-conscious consumers overlooking promotions amid broader economic concerns, including the impact from ongoing conflicts in the Middle East. This financial shortfall coincided with a continuing decline in global sales, marking a fourth consecutive quarter of slowed growth, with the latest figures showing an increase of only 1.9% compared to the anticipated 2.35%.
READ MORERecord Increase in U.S. Labor Costs Points to Continued Inflationary Pressure
U.S. labor costs surged by 1.2% in the first quarter, marking the largest increase in a year and exceeding economists' forecasts, according to the Bureau of Labor Statistics. This rise in the employment cost index, a key indicator of wage and benefit costs, suggests ongoing wage pressures that contribute to persistent inflation. The data, which surprised markets, led to a drop in stock-index futures, an increase in Treasury yields, and a strengthening of the dollar.
READ MORERising Pay and Benefits Signal Potential Inflation Challenges for Fed
In the first quarter of this year, the pace of pay and benefits growth for American workers increased, potentially heightening inflation concerns for the Federal Reserve. According to the Labor Department's Employment Cost Index, compensation rose by 1.2%, up from 0.9% in the previous quarter. This steady year-over-year growth rate of 4.2% could influence the Fed's decisions on interest rates, particularly with inflation fears looming as they conclude their latest policy meeting.
READ MOREFTX Alum Buys Titanic's Gold Watch for Record $1.5 Million
Patrick Gruhn, a German fintech entrepreneur and former FTX executive, purchased a gold pocket watch recovered from the Titanic for nearly $1.5 million at an auction, setting a record for Titanic memorabilia. The watch, which once belonged to American tycoon John Jacob Astor IV, was bought as a gift for his wife, Maren Gruhn, and will be displayed in museums. This sale was conducted by Henry Aldridge & Son, a renowned auction house specializing in Titanic items.
READ MOREGlobal Gold Demand Hits Eight-Year High in Q1, Fueled by Investment and Central Banks
Global gold demand reached its highest first quarter level in eight years, with a 3% increase to 1,283.3 metric tons, the strongest since 2016. This surge was driven by robust investments in the over-the-counter market, where trades more than tripled to 136.4 metric tons from last year's 42.7 metric tons, and record-breaking purchases by central banks. Joe Cavatoni of the World Gold Council highlighted the significant ongoing role of gold in emerging-market central banks' reserve portfolios, suggesting a strong outlook for the remainder of the year.
READ MOREChina's $170 Billion Gold Accumulation Stirs Taiwan Conflict Fears
China's recent accumulation of a $170 billion gold reserve, following a record 27-tonne purchase that raised its total to 2,262 tonnes, has sparked concerns over its preparations for potential conflict regarding Taiwan. The People’s Bank of China's strategic buying, which began in October 2022 and marks the longest gold stockpiling period since 2000, appears to be a precaution against Western sanctions in case of escalating tensions with Taiwan.
READ MOREIndia's Gold Demand Climbs 8% in Q4 Despite High Prices, WGC Reports
Despite record-high prices, India's gold demand rose by 8% to 136.6 tonnes in the March quarter, according to the World Gold Council's "Gold Demand Trends Q1 2024" report. This increase was driven by both a rise in the quarterly average prices by 11% and a volume growth that led to a 20% surge in value terms to Rs 75,470 crore. Jewelry demand grew by 4% to 95.5 tonnes, and investment in gold bars and coins jumped by 19% to 41.1 tonnes, compared to last year.
READ MORERising Gold Prices Could Push India's Demand to Lowest in Four Years, Says WGC
Despite an 8% increase in India's gold demand in the March quarter, the World Gold Council (WGC) warns that soaring gold prices may reduce the country's total 2024 gold consumption to a four-year low. Sachin Jain, CEO of WGC's Indian operations, indicated that if prices keep rising, demand might drop to the lower end of the projected 700 to 800 metric tons range.
READ MOREMarket Data Hints at Massive Yen Intervention by Japan
Japan is actively prepared to address foreign exchange issues, emphasized Masato Kanda, a top currency official, in light of recent market data indicating a possible $35 billion intervention by the finance ministry to support the depreciating yen. Although Kanda did not confirm Monday's sudden yen rise as an intervention, traders and a former official suggested it was. Additionally, central bank projections expect increased yen receipts, hinting at substantial yen purchases, which usually settle in two days.
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