Gold Clawing Back

Gold Clawing Back

Gold clawing back as investors step in to buy the dip and markets react to stressed world stock markets. The yellow metal had fallen early Monday, extending last week’s losses, as the dollar held near a two-decade high following hawkish comments Friday from Federal Reserve Chairman Jerome Powell.

The central bank will continue to act aggressively to fight four-decade highs in inflation, Powell said in a speech in Jackson Hole, Wyoming. The remarks triggered a selloff Friday in gold and equity markets.

“Restoring price stability will likely require maintaining a restrictive policy stance for some time,” Powell said at the Kansas City Fed’s annual policy forum. “The historical record cautions strongly against prematurely loosening policy.”

Front-month gold futures fell 0.7% last week to settle at $1,749.80 an ounce on Comex, after the December contract decreased 1.2% Friday. Bullion is down 1.8% so far this month after dropping 1.4% in July. The metal retreated 3.5% in 2021. Currently, the December contract is slightly down -0.2 (-0.01%) an ounce to $1749.60 and the DG spot price is $1,740.90.

Speculators cut their net long positions in Comex gold in the week ended Aug. 23, according to the Commitments of Traders report released Friday by the U.S. Commodity Futures Trading Commission. 

Powell’s remarks were read by investors as doubling down on the Fed’s plan to aggressively increase interest rates to curb inflation. The Dow Jones Industrial Average dropped 1,008.38 points, or 3%, Friday to 32,283.40, while the S&P 500 fell 3.4% to 4,057.66. The Nasdaq Composite Index tumbled 3.9%.

Investors are now betting there’s a 72.5% chance of a 75-basis-point increase next month, with just 27.5% projecting a 50-basis-point rate hike in September, according the CME FedWatch Tool. A week ago, 53% of investors were betting on a 50 basis point increase. The Fed raised rates by 75 basis points each in June and July. 

The Fed’s preferred inflation measure, the personal consumption expenditures price index, also came out Friday. It showed price pressures eased in July, though they remained elevated. The PCE showed a 6.3% rise in July from a year earlier, slower than the 6.8% indicated in June. The index fell 0.1% month over month. Separately, consumer sentiment rose to a three-month high in early August, according to the University of Michigan report.

This week, investors will be closely watching for a series of U.S. jobs reports, including the key U.S. employment report for August, set for release on Friday. A number of Fed officials are also set to speak, potentially giving further indications on the state of the economy and the Fed’s thinking.

Front-month silver futures retreated 1.8% last week to settle at $18.83 an ounce on Comex after the December contract dropped 1.8% Friday. Silver is down 6.8% this month after slipping 0.8% in July. It retreated 12% in 2021. Silver prices are tied to industrial demand. The December contract is currently down -0.245 (-1.30%) an ounce to $18.580 and the DG spot price is $18.80.

Spot palladium slipped by 0.2% last week to $2,144.50 an ounce after falling 1.2% Friday. Palladium is down 0.6% in August after rising 9.9% in July. It retreated 22% in 2021. Currently, the DG spot price is slightly down $0.20 an ounce to $2148.50.

Spot platinum fell 3.2% last week to $873.10 an ounce after losing 1.9% Friday. Platinum has tumbled 3.7% in August after slipping 0.3% in July. It dropped 9.4% last year. The current DG spot price is slightly up $0.20 an ounce to $877.50.


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