There was no hiding place in gold as the global CrowdStrike/Microsoft outage plunged markets and businesses into chaos and confusion on Friday. Gold fell sharply, confounding bulls who expected it to firm as a ‘safe haven’ in volatile times like those seen in Friday’s trading.
Some commentators said it was probably hard for many traders to get into the session because the CrowdStrike/Microsoft outage had made reliable computer communications problematic (especially using Windows-based systems or technologies).
Amid the confusion, the US dollar rose, which you’d expect in times of uncertainty. However, US bond yields rose slightly for the 10-year securities and eased slightly for the closely followed 2-year notes.
Gold was sharply lower at Friday’s close, pushing back under the $2,400 mark as it corrected from a record high set on Wednesday. Gold for August delivery settled down $256.70 to $2,399.70 per ounce after rising to a record $2,467.80 on Wednesday and ended after-hours trading at $2,402.80 in New York.
The dollar rose early, with the ICE dollar index last seen up 0.20 to 104.37 after dropping to a four-month low of 103.75 on Wednesday. That move was due to the ripples triggered by the confusion caused by the computer problems.
Expectations that the Federal Reserve will begin cutting interest rates in September have offered support for the metal, but with the Fed’s favored inflation measure (the Personal Consumption Expenditure Price Index) to be released Thursday of this week, enthusiasm will be tempered until that data is in the market.
“Gold prices continue to outpace our expectations around all-time highs. Market participants rightfully remain focused on the Fed’s eventual rate cuts, which have ramped. Deeper and/or quicker easing, coupled with geopolitical risks, the US election cycle, central banks, and consumer appetite, have aided gold’s rise,” noted Christopher Louney, a commodities strategist at RBC Capital Markets.
Comex silver prices sold off, down 5.2% for the week (and 2.7% on Friday), ending at $29.40 an ounce.
Comex copper lost ground, down 7.5% over the week as Chinese production data for copper was weak (as were the import figures for metal), while the figures for the stricken property sector were not good for the metal at all.
Nor was it encouraging for iron ore. In Singapore, iron ore ended the week with a small loss at $104.50 a tonne, down from $108.01 the Friday before.