Gold and Silver Industry & Investing News
Today’s gold and silver market news, curated from the best of GoldSilver's team and around the web. Everything precious metals investors need to know including updates on big price swings, macro analysis, and breaking stories. Check back often or subscribe to get the highlights in your inbox. Monitor live spot prices on our charts page.
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TOP NEWSChinese Gold Trading EXPLODES
Join Alan Hubbard in today’s update on the massive increase in Chinese gold trading activity.
HBAR - Real World Asset Tokenization is Here
Tune in today for a much-requested update on Hedera Hashgraph with Brandon Hargreaves.
READ MOREStarbucks, McDonald's Feel the Pinch as Diners Tighten Belts
The long-anticipated consumer pullback in spending is now evident in the restaurant industry, with notable chains like Starbucks, KFC, and McDonald’s experiencing declines in same-store sales. Starbucks saw a significant 17% drop in share prices following a surprising sales dip, attributed partially to adverse weather. Similarly, Yum Brands cited January snowstorms and challenging year-over-year comparisons for underwhelming performance across its brands, including Pizza Hut and Taco Bell.
READ MOREBiden Administration Cancels $6.1 Billion in Student Debt for 317,000 Amid Fraud Claims
The Biden administration has announced the forgiveness of $6.1 billion in student debt for 317,000 former students of The Art Institutes, following the chain's closure last fall amid fraud allegations. This move is part of President Biden's broader strategy to address the nation's $1.7 trillion student debt, especially after broader relief efforts were hindered by the Supreme Court last year. The Art Institutes were accused of misrepresenting employment rates and salary data, leaving many graduates with significant debt and few tangible benefits, according to U.S. Secretary of Education Miguel Cardona.
READ MORESteady Unemployment Claims Signal Robust U.S. Labor Market
Despite a slight stall in worker productivity in the first quarter, the U.S. labor market remains tight, with unemployment claims maintaining a steady, low level last week. Economists are optimistic, attributing the productivity slowdown to seasonal quirks and maintaining a positive outlook for the economy’s performance in the second quarter.
READ MOREPowell Dismisses Stagflation Fears
During a recent conference, Federal Reserve Chair Jerome Powell dismissed concerns about stagflation, referencing historical contexts where stagflation involved much harsher economic conditions than those seen today. Despite a GDP growth report of 1.6% and a core PCE price index increase of 3.7%, Powell cited current solid growth and inflation under 3% as evidence against imminent stagflation. However, given Powell's previous misjudgments on economic trends, including a missed prediction on post-pandemic inflation spikes, UBS has developed strategies in case his current assessments prove incorrect again.
READ MOREU.S. Labor Market Holds Strong; First Quarter Productivity Sees Minor Dip
The number of new unemployment claims last week stayed low, indicating a strong economic support into the second quarter. Despite a near halt in worker productivity growth in the first quarter, economists dismissed concerns, attributing the slowdown to seasonal patterns and affirming the overall solid productivity trend.
READ MOREGold Prices Dip as U.S. Rate Cut Hopes Diminish Amid Inflation Concerns
Gold prices declined on Thursday as investors reevaluated the likelihood of U.S. interest rate cuts after the Federal Reserve indicated that inflation progress has stalled, suggesting higher interest rates may persist longer. Despite a brief surge in gold prices following a dip in the dollar and Treasury yields, the gains were short-lived. The Fed’s recent decision to maintain steady interest rates, coupled with cautious remarks about potential rate cuts, reflects ongoing concerns about inflation. Analyst Ross Norman noted that while delayed rate cuts are generally seen as negative for gold, the market's fluctuations offer temporary relief.
READ MOREFed's Powell Cautious on Rates, Inflation Data to Guide Future Decisions
Federal Reserve Chair Jerome Powell emphasized the potential for declining inflation while maintaining a cautious tone on interest rates, acknowledging them as restrictive. Despite Powell's optimism, recent disappointing inflation and wage data have shifted investor focus from the Federal Reserve's forecasts to actual economic trends. Powell asserts his views, but as Neil Dutta from Renaissance Macro Research notes, it is the concrete inflation figures that will ultimately guide the Fed's actions. Meanwhile, the Fed's latest policy statement hints at a potential rate cut, though former advisor William English suggests that persistently high inflation could lead to a reversal of this stance, increasing the likelihood of rate hikes.
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.
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