A Look Back at the Week’s Market Activity
Monday, 2.24.25:
Gold prices touched record highs before easing slightly, with April gold up $7.20 at $2,960.10, while March silver dipped $0.392 to $32.625. Safe-haven demand, technical momentum, and central bank buying provided initial support, though uncertainty around global trade and geopolitical risks added volatility.
Tuesday, 2.25.25:
A wave of profit-taking led to a pullback in both gold and silver. Silver faced notable technical pressure, potentially signaling near-term consolidation. Despite heightened risk aversion after President Trump proposed new tariffs on Mexico and Canada and encouraged allies to restrict China’s chip sector, gold failed to see the anticipated safe-haven boost.
Wednesday, 2.26.25:
Gold and silver rebounded as buyers stepped back in following Tuesday’s decline. April gold rose $11.40 to $2,930.20, while March silver gained $0.449 to $32.275. Meanwhile, the U.S. dollar index strengthened slightly, crude oil fell to a two-month low at $68.75 a barrel, and the 10-year Treasury yield stood at 4.3%. Markets shifted focus toward upcoming inflation data from the PCE price index.
Thursday, 2.27.25:
Short-term traders took profits, driving gold to a two-week low at $2,902.30, down $27.90, while silver slipped $0.097 to $32.175. While underlying fundamentals remain constructive, gold lacked fresh catalysts to sustain its rally—an important dynamic in any bull market.
Friday, 2.28.25:
Gold and silver extended their declines as further profit-taking pushed April gold to $2,867.70 (-$28.20) and May silver to $31.685 (-$0.425). The January PCE inflation index rose 2.5% year-over-year, in line with expectations, easing immediate concerns of accelerating inflation. Market reactions remained muted, though analysts suggest the data may influence future Federal Reserve policy decisions.
Gold Faces Pressure as Stagflation Concerns Build—Is a Rebound on the Horizon?
Gold prices have faced near-term selling pressure, even as economic indicators highlight rising stagflation risks—persistent inflation alongside slowing consumer spending. This complex economic backdrop presents challenges for policymakers and opportunities for those looking to safeguard their purchasing power.
Key Developments:
- Core PCE inflation, the Federal Reserve’s preferred gauge, rose 0.3% in January, up from 0.2% in December, aligning with expectations. This steady increase suggests that inflationary pressures remain despite earlier signs of easing.
- Year-over-year core inflation now stands at 2.6%, slightly lower than December’s reading, but still above the Fed’s 2% target.
- Personal spending unexpectedly declined by 0.2%, missing forecasts of a 0.2% increase. This drop raises concerns about consumer confidence and economic momentum.
- Personal income jumped 0.9%, more than doubling expectations of a 0.4% increase, signaling that while wages are rising, households may be shifting toward saving rather than spending.
- Spot gold futures eased 0.73% to $2,855.60 as market participants adjusted positions, reflecting uncertainty around the Fed’s next steps.
Broader Market Implications:
The U.S. economy continues to send mixed signals—persistent inflation, weaker spending, and rising income create a complex backdrop for the Federal Reserve. Stagflationary environments have historically been favorable for gold, which serves as a hedge against both inflation and economic uncertainty. If economic stagnation continues alongside elevated inflation, gold could see renewed strength as markets seek stability.
Persistent Inflation Keeps Gold in Focus—But It’s Not the Only Factor
Gold’s rally is not solely driven by inflation—it reflects deeper economic shifts, including evolving monetary policies and shifts in global financial reserves.
Recent Trends:
- Gold has climbed nearly 7% since Trump’s inauguration, currently trading above $2,900 per ounce, showing resilience even amid broader market fluctuations.
- Inflation has risen over 20% in the past four years, remaining a key concern for monetary policy and reinforcing the appeal of tangible assets.
- Central banks, particularly in China, India, and Russia, continue to accumulate gold at record levels, signaling a strategic move away from reliance on the U.S. dollar.
- Gold remains underrepresented in global financial portfolios, accounting for less than 1% of total assets, presenting long-term growth potential.
- Mining stocks remain undervalued, offering an alternative way to gain exposure to gold’s long-term strength.
What This Means for the Market:
While inflationary pressures persist, gold’s role as a store of value remains paramount. Central banks continue diversifying their reserves into gold, reinforcing its importance in a shifting global financial landscape.
Gold’s Rally May Slow, but Silver’s Supply Constraints Are Just Beginning
Gold has seen strong momentum, but silver’s structural deficit could be an even more compelling long-term story.
Key Takeaways:
- Gold’s price strength is occurring alongside a rising U.S. dollar—an unusual dynamic that suggests broader economic shifts are at play.
- Silver is now in its fifth consecutive year of a supply deficit, driven largely by booming demand for solar panels and industrial applications.
- A physical liquidity squeeze is emerging, as silver is increasingly withdrawn from London and moved into U.S. markets, tightening available supply.
- Unless prices rise to incentivize more production, the silver market could face further shortages, making future price increases more likely.
Outlook:
While gold’s rally may experience periods of consolidation, silver’s supply constraints suggest a long-term bullish case for the metal. This fundamental scarcity could drive substantial price appreciation in the coming years.
India and China Shift Reserves from U.S. Treasuries to Gold
Two of the world’s largest economies continue reducing their exposure to U.S. dollar assets while increasing gold reserves.
Key Developments:
- India has tripled its gold reserves in the past decade, now valued at $70.9 billion.
- China’s gold holdings have more than doubled over the same period, reaching $73.5 billion.
- Global gold demand surged 24% year-over-year in 2024, reaching a record $382 billion.
- Recent U.S. trade policies, including new tariffs, have added further uncertainty to financial markets.
Big Picture:
The shift toward gold signals a broader move away from reliance on U.S. Treasury bonds, highlighting gold’s growing role in global financial stability.
Why Are Major Banks Flying Gold Bars from London to NYC?
A price gap between London and New York is driving major banks to physically transport gold across the Atlantic.
What’s Happening:
- New York gold prices have been trading higher than London’s, creating an arbitrage opportunity.
- JPMorgan Chase and HSBC are moving physical gold to capitalize on this price differential.
- JPMorgan alone is transferring $4 billion in gold to New York this month.
- Gold futures are up more than 10% in 2025 and over 44% from a year ago.
Market Impact:
These movements highlight how demand for physical gold remains strong, reinforcing its role as a critical asset in global finance.
Next Week’s Key Events—Economic Calendar
Monday, March 3
- 9:45 AM ET – S&P Final U.S. Manufacturing PMI (Feb.)
- 10:00 AM ET – ISM Manufacturing (Feb.)
- 12:35 PM ET – St. Louis Fed President Musalem speaks
Tuesday, March 4
- 2:20 PM ET – New York Fed President Williams speaks
- TBA – Richmond Fed President Barkin speaks
Wednesday, March 5
- 8:15 AM ET – ADP Employment (Feb.)
- 9:45 AM ET – S&P Final U.S. Services PMI (Feb.)
- 10:00 AM ET – ISM Services (Feb.)
Thursday, March 6
- 8:30 AM ET – Initial Jobless Claims (March 1)
- 7:00 PM ET – Atlanta Fed President Bostic speaks
Friday, March 7
- 8:30 AM ET – U.S. Jobs Report (Feb.)
- 10:45 AM ET – New York Fed President Williams speaks
- 3:00 PM ET – Consumer Credit (Jan.)
Potential Impact on Precious Metals:
- Manufacturing & Services Data: Strong numbers could strengthen the U.S. dollar, pressuring gold, while weaker reports may boost demand for safe-haven assets.
- Federal Reserve Speeches: Any signals on monetary policy shifts could influence interest rate expectations and gold prices.
- Employment Data: A robust labor market may weigh on gold, while signs of slowdown could increase its appeal as an economic hedge.
- Consumer Credit Trends: Expanding credit could indicate strong spending, while a decline may suggest financial stress, potentially boosting gold demand.
Final Thoughts
Gold’s long-term strength remains intact as global economic uncertainty persists. Staying informed on the evolving financial landscape is crucial for those looking to preserve wealth.
For more insights into the precious metals market, visit Prime Asset’s website to stay ahead of key trends.
