How Has Gold Fared This Summer?
Gold prices are on an upswing lately after the price remained largely stagnant for most of the summer. Earlier this month, gold posted its best week in seven months, rising about 7% in price, largely thanks to a weaker dollar, declining Treasury yields and an unexpected slump in employment data. But before the August surge, gold was mostly bound between $4,000 and $4,200 for much of the summer as it came off its worst quarter in more than a decade. For the three months ending June 30, gold shed about 16% of its value, its worst percent decline since 2013. By that time, gold and silver had both fallen to about seven-month lows, with gold falling below $4,000. At the time, analysts blamed a stronger dollar, which was then at its highest level in more than a year, and expectations that the Federal Reserve may raise rates at some point this year.
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Silver also saw a moderate price increase on Wednesday, rising about 3% to an intraday high of $66.16. Unlike gold, silver is not at a two-month high. Silver reached higher prices of about $67 last week, and its price had previously risen past $70 in mid-June.
Will The Federal Reserve Raise Rates This Year?
It is possible the Federal Reserve could raise interest rates later this year. CME Group’s FedWatch tool says the probability of a rate hike at the Fed’s December meeting is about 69.2%, while the likelihood of an earlier rate hike is much lower (36.6% for September and 49.2% for October). Higher interest rates are generally associated with decreasing metals prices, meaning an interest rate hike could potentially cause the prices of gold and silver to fall.
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Gold and silver have come down from the all-time highs they hit earlier this year. In January, the metals capped a months-long, historic price rally as gold topped out around $5,600 while silver reached a record $121. Silver has since shed nearly half that value. Both metals have generally declined throughout the Iran war, as they have traded inversely with oil prices, which spiked during the conflict. Prior to losing much of their value, gold and silver rose so dramatically because of factors including interest rate cuts, President Donald Trump’s tariffs, international tensions and increasing demand for metals from technological industries.
further reading
Inflation Rose As Expected In July—But Not Enough To Force An Interest Rate Hike, Analysts Say (Forbes)
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