GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data and headlines that had the most impact on gold prices—and may continue to into the future—as well as the charts for silver, the US Dollar and other key correlated assets.

Gold prices are closing the week not far from a full $100/oz below Sunday’s opening prices, having been unable to recover from the tremendous selling seen on Monday in a market-wide rush to the prime safety of cash. Silver prices are also markedly lower, alongside much of the raw commodities asset class.

So, what kind of week has it been?

Monday: Gold & Silver Prices Slashed as the Market Scrambled for Cash

In our weekly preview piece, we laid out some of the destabilizing concerns that were rocking global markets to begin the trading week. The US’s trading session on Monday saw those concerns and uncertainty dominate the markets for most major assets; indeed, gold and silver, along with prices for most core raw commodities, were battered badly in the morning hours before managing to limp into the close after a mild bounce.

As US stock markets opened to initially fall more than 2%, investors and managers rushed to sell anything they could in a pivot to USD-denominated cash and the safest of safe sovereign bonds. The greenback would ultimately jump more than 0.5% higher on the day while US, German, and UK government debt also climbed. On the very red side of the ledger, gold spot prices plummeted to and through key levels of trend-based and psychological support. The yellow metal sold below $1900/oz for a few hours on Monday morning, and silver prices collapsed back below $25—6+ week lows for both. Exacerbating the pressure on metals prices was also a general sell-off in all key commodities, with oil dropping below $40/barrel.

The liquidation race in US equities moderated mid-day as rallying megacap tech stocks once again came to the rescue of benchmark indices, and this alleviated some of the selling pressure on gold which was give the room and bids to climb back as high as $1910/oz before trading closed. Silver was less resilient and failed to regain a 25-handle.

Tuesday: Charts Calmed and Consolidated in the Eye of the Storm

Compared to the day prior, Tuesday’s markets had a glassy calmness to them. Equity buyers stepped into Monday’s deep dips and lifted the major stock markets to gains on the day; though stock looked certain still to close September with the first monthly drawback since the spring.) There was never any kind of sharp rally higher for equities though, and just-recently high value assets like gold remained under pressure as it was clear that a lot of money was still choosing to remain on the sidelines with the week’s looming risk concerns held at the forefront thanks to FOMC Chairman Powell and others.

Through the European and New York trading hours, while silver managed to scrape together slightly better gains on the day, gold’s spot chart appeared to consolidated just above a line of support at $1900/oz. As we saw at the start on Tuesday evening though, with the start of trading in Asian markets, that support for the commodities complex was simply not strong enough.

Wednesday: With Fed Warnings Growing Louder, Precious Metals’ Shine Dimmed Further

Although a rebound in risk appetite seemed to be happening in the Asian and European equity markets on Tuesday night into Wednesday morning, gold’s longs and technical bulls were broken under heavy selling pressure, and the yellow metal collapsed below $1900/oz sometime after 10pm EDT. Overseas investors seems willing to step their cash back into the market, but clearly valued equity risk far above the precious metals: as Asian stock markets were mixed-to-higher and European markets rose, gold fell farther away from previous support, initially dropping as low at $1875/oz in spot trading (while silver collapsed to $23. The US trading session would only worsen the precious metals’ returns.

Although pre-trading indicators suggested that US stock markets would continue to rally from Monday’s losses as other developed economies’ exchanges had, market sentiment and risk appetite turned sour almost immediately on Wednesday. FOMC Chairman Powell renewed his warnings that the path to a US recovery remains long, and his—or, more importantly, the Federal Reserve’s—assertion that the outlook turns disastrous without a considerable push of additional fiscal stimulus which, as of Wednesday, appeared exceptionally unlikely to be forthcoming from a stagnant, inept Congress. To drive the point home, Chairman Powell’s calls were echoed throughout the day by a long list of FOMC members. With little in the way of near-term optimism, US equity markets plummeted to an eight-week low and, arguably, the territory of a technical correction.

Having already been knocked several pegs lower by technical-driven selling pre-market, many of the remaining gold holders on Wednesday wiped out their positions in another flight to the safety of cash denominated in King Dollar, and silver followed as the broad commodities basket got swamped. Gold spot prices continued to fall through US trading and, as Asian and European managers woke up to the warnings and worries of the Fed, overnight trading as well. In overseas trading, gold prices fell to theoretical support at $1850/oz while silver threatened to drop back to $20.

Thursday: Uncertainty and Worry Kept Equities Under Pressure while Only Offering Mild Support for Precious Metals

The gloom and doomsaying that threaded throughout this week seemed to fully settle and take a full hold on the markets on Thursday. Overseas markets were pressured lower by US stocks’ ugly Wednesday in light of Jerome Powell & Co’s warnings, and the next US session got off to a worrying start with initial jobless claims unexpectedly climbing for the week. With coronavirus infection rates rising again in many developed nations and anecdotal economic observations adding to the unease created by higher unemployment filings, the market appeared to firmly dig into a risk-averse stance.

US equities briefly rose on the back on vague suggestions in Washington that stimulus talks are still happening, but the reality for investors and managers—that odds are increasingly slim of any new fiscal rescue package passing before the November elections, and still thinner chances of any kind of vaccine before 2021—soon enough sank back in, and the key benchmarks for the US stock market ultimately gave up most of their gains on the day.

It seems that gold and silver finally stated to look “cheap” after the midweek tumble, and amid the growing concerns about the economic path forward, both charted climbs higher on Thursday. The yellow metal peaked above $1875/oz midday and silver rose to $23.25 before both were weakened by resistance and some end-of-day profit-taking.

Friday: Gold and Silver Prices are Looking for a Lift

Signs of life in the precious metals’ trading charts on Thursday were promising, but if I’m being honest it’s hard to argue for a large flow of reinvestment into gold just yet. My key takeaway from the trading pattern of the last ten days is that the current level of worry and uncertainty around the world and in global markets is driving most investors into heavy cash positions, and given the gains made by long-term gold holder in 2020, they’re more than willing to liquidate gold positions in order to grab the Dollar. Now, with US markets either continuing to weaken (which will continue this week’s trend,) or positioning for a rebound (which will probably still leave safe-havens like gold on the sideline,) it feels like precious metals may have a hard time finding another leg higher until the next paradigm shift.

That said, with US stock markets tipping just slightly higher midday Friday gold and silver prices are finding some level of stability above the week’s lowest runs. We seem to have entered the calm lead-in to the close already, so the next move for metals probably won’t show until Sunday night/Monday morning.

Next Week

We saw the weight of real concern from FOMC voices have a clear impact on risk markets this week, so we’ll be keeping an eye on next week’s round of Fed appearances for possibly more of the same. Primarily though, the economic calendar is considerably busier, with in update on the Fed’s inflation metrics, and then the monthly Jobs Report on Friday.

For now, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see everyone back here on Monday for our preview of the week ahead.