- Policy Tightening Lifts Yields Further
- Other Precious Metals Fall Strongly
- Tumultuous Day for Entire Market
In commodities news, the price of gold declined on the day to finish off posting a losing week. This comes as the Fed continues to adopt a more hawkish outlook with respect to future rate hikes. The sentiment this has created has seen Treasury Yields move higher and had a knock-on impact on gold prices. Not only gold has fallen to end the week. Several other precious metals and commodity markets felt the strain on Friday posting big drops. The reverberations of these policy decisions are also being felt across the wider market. Wall Street posted some of its biggest losses of the year on Friday.
Hawkish Fed Approach Continues to Add Weight
The main cause of pressure in the market throughout this week as it has been in several other weeks, is the Fed monetary policy and how this will evolve in the coming months, particularly with respect to interest rates. This has a direct correlation with gold and other precious metal prices since these typical, safe-haven, store of value type assets tend to underperform in a rising rate environment. The commentary from Fed Chair Jerome Powell that a 0.5% interest rate increase seems to be likely then would never help gold prices.
Gold finished Friday almost 1% lower for the day and with an overall weekly loss as it sat at just around $1,932. There is still confidence from analysts though that gold will continue to attract buyers given the inflationary pressure that is also existing in the market.
Other Precious Metals Also Weighed Down
There have deep drawdowns across the board to end the week in precious metals. The declines in the other precious metals were most likely a result of the same causes that afflicted the gold market, combined with the ongoing geopolitical tension in Eastern Europe. Chinese demand has also suffered as a result of COVID-related concerns dominating the news there.
As gold dropped around 0.9% on the day, silver incurred bigger losses posting a 1.9% daily decline which added up to a weekly fall back of more than 5.5%, its biggest weekly drop since January. Platinum and palladium prices were both also down. The former by more than 4.5% on the day and the latter by more than 2%.
Wider Market Continues to Feel Pressure
The challenges of the day were not only confined to commodities and precious metals. The broader market has also been suffering both on Friday and throughout the week. This was evidenced on Friday in particular with big losses on Wall Street.
Falling for the fourth week in a row, Friday was the worst day since 2020 for the Dow Jones which gave up 900 points. There were concerning drops too in the S&P 500 which lost more than 2.5% as did the NASDAQ. All are signs that the market is very much battling against monetary policy and inflation concerns.