Silver sharpens decline to four-week low as dollar plods north
Silver prices declined in European trade on Monday for the sixth straight session, plumbing four-week lows as the dollar gains ground.
Speculation about the Federal Reserve maintaining high interest rates for an extended duration throughout 2024 rebounded after strong US labor data last week.
Silver Prices Today
Silver prices fell 0.35% to $22.92 an ounce, the lowest since November 14, with a session-high at $23.10.
Silver prices closed down 3.4% on Friday, the fifth decline in a row and the longest such streak of daily losses since late August following strong US labor data.
Silver swooned 9.75% last week, the largest weekly loss since September 2020.
Silver dropped from seven-month high at $25.92 on aggressive profit-taking as both the dollar and US treasury yields rebound, while concerns about Chinese demand increase.
The Dollar
The dollar index rose 0.2% on Monday, the second profit in a row, almost surpassing three-week highs at 104.26 against a basket of major rivals.
A stronger dollar makes dollar-denominated silver futures costlier to holders of other currencies.
Recent data showed the US economy added 199 thousand new jobs last month, above estimates of 190 thousand, and up from 150 thousand inn October.
Unemployment fell to 3.7% from 3.9%, while labor participation rose to 62.8%.
The Fed is waiting for tight conditions in the labor sector to loosen before taking the step of easing policies, but so far such loosening hasn't happened yet.
Gold gives up $2000 an ounce, plumbs three-week trough
Gold prices fell in European trade and traded below the psychological level of $2000, sharpening losses for a second day and plumbing a three-week low under pressure from the strengthening dollar.
Dollar's gains come following strong US labor data, which hurt the odds of early US interest rate hikes in March 2024.
Gold Prices Today
Gold prices fell 0.7% to $1,991 an ounce, the lowest since November 23, with a session-high at $2,007.
Gold closed Friday down 1.2%, the first loss in three days on US labor data.
Gold dropped 3.25% last week, the first weekly loss in a month on profit-taking away from a record high at $2,146, under pressure from the stronger dollar and US yields.
The Dollar
The dollar index rose 0.2% on Monday on track for a second day of profits and about to surpass three-week highs at 104.26 against a basket of major rivals.
A stronger dollar makes dollar-denominated gold futures costlier to holders of other currencies.
US Labor Data
Recent data showed the US economy added 199 thousand new jobs last month, above estimates of 190 thousand, and up from 150 thousand inn October.
Unemployment fell to 3.7% from 3.9%, while labor participation rose to 62.8%.
US Rates
Following the data, odds for a US interest rate hike at the December Federal Reserve meeting stood at just 2.5%.
Odds for a 0.25% interest rate cut at the March 2024 meeting fell to 40%, while odds for such a cut at the May meeting fell to 75% from 85%.
Now investors await crucial US inflation data for November later this week, and the final Fed policy meeting of the year to gather clues about the likely path ahead for policies.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat on Friday at a total of 880.55 tonnes.
Euro strives to recoup from three-week trough amid mounting pressures
Euro rose in European trade on Monday against a basket of major rivals while trying to recoup from three-week lows against the dollar amid mounting pressures on the common currency with prospects of early interest rate cuts by the ECB.
The European Central Bank's meeting on Thursday will provide clues on the future of interest rates in the euro zone as inflation approaches medium-term targets.
EUR/USD
EUR/USD rose 0.15% to 1.0774, with a session-low at 1.0756, after losing 0.3% on Friday, plumbing three-week lows at 1.0724 following strong US labor data.
EUR/USD lost 1.1% last week, the second such weekly loss in a row following bearish remarks by ECB officials.
Banque de France's Governor François Villeroy de Galhau said that cutting European interest rates is likely in 2024 as the economy shrinks faster than expected.
European Central Bank member Isabel Schnabel said on Tuesday that more interest rate hikes in the euro zone "are unlikely", following the inflation data in November.
She said the data shows that inflation is losing steam but without the risk of long-term recession with it.
She believes that inflation is going in the right tract but there's need for progress in other major sectors.
The ECB
The European Central Bank is expected to hold interest rates flat at 4.5% this week, already the highest in 22 years.
The probability of an ECB 0.25% interest rate cut at the March 2024 meeting stands at 85%.
The pricing for interest rate cuts throughout 2024 will likely change following the ECB's official policy meeting this week.
US stock indices trade mostly flat ahead of the weekend
Most US stock indices were flat on Friday following the release of the all-important US payrolls report.
Earlier data showed the US economy added 199 thousand new jobs last month, above estimates of 190 thousand, and up from 150 thousand inn October.
Unemployment fell to 3.7% from 3.9%, while labor participation rose to 62.8%.
On trading, Dow Jones stabilized at 36,122, while S&P 500 steadied at 4,584, as NASDAQ traded flat at 14,339.