Gold bounces back from slight overnight dip regaining its one-week high over $1,780 an ounce early Monday even after the dollar rose.
Earlier in the trading day, investors primarily turned to the dollar as a safe haven trade after U.S. consumer sentiment plunged, making it less likely that the Federal Reserve would act to taper stimulus measures. Gold is also a traditional risk-off trade, but there was more interest in the U.S. currency. But there’s still a floor under gold prices amid continued uncertainty about the spread of the coronavirus and the rapidly unraveling political situation in Afghanistan.
Consumer sentiment fell to the lowest level since 2011 in the University of Michigan’s preliminary August reading, released Friday. The move reflected concerns about the rapid spread of the delta variant of the coronavirus and the effect it may have on the economy.
Investors are awaiting comments from Fed Chairman Jerome Powell on Tuesday and the release of the minutes of the last meeting of the Federal Open Market Committee on Wednesday for additional signals on the central bank’s thinking.
Some investors have said the Fed should act to curb high inflation. High consumer prices are typically bullish for gold, but if inflation is so high that the Fed tapers its stimulus measures sooner rather than later, that would be bearish for the precious metal.
September silver futures fell 2.3% last week to settle at $23.78 an ounce on Comex, though the front-month contract rallied 2.9% Friday. Silver is down 6.9% so far this month after dropping 2.5% in July. The metal rose 47% in 2020 and is down 10% so far this year. Silver prices are tied to industrial demand, which could taper if lockdowns are reinstated and dampen manufacturing. The September contract is down $0.034 (-0.14%) an ounce to $23.745 and the DG spot price is $23.79.
Spot palladium rose 0.9% last week to $2,666.00 an ounce after gaining 1% Friday. It fell 4.3% in July and is up 8.8% so far in 2021. Currently, the DG spot price is down $25.20 an ounce to $2,644.50.
Spot platinum rose 4.7% last week to $1,037.80 an ounce after advancing 0.8% Friday. The autocatalyst decreased 2.1% in July and is down 3.3% in 2021. The DG spot price is currently down $10.80 an ounce to $1,026.30.
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