Gold climbs back from near two-week low as investors buy the dip. The yellow metal had fallen earlier in the trading day as the dollar and U.S. Treasury yields strengthened, making the bullion a less attractive investment, particularly for holders of other currencies.
Investors awaited the key first-of-the-month manufacturing report for May for indications on the state of the economy and further direction. Closely watched jobs reports for May are also due out over the next few days.
The economic reports will be closely scrutinized for hints on what the Federal Reserve may do at its next meeting to combat high inflation without derailing economic growth.
August gold futures fell 0.5% Tuesday to settle at $1,848.40 an ounce on Comex. U.S. financial markets were closed Monday for the Memorial Day holiday, and there was no settlement on the holiday. The most-active contract advanced 0.5% last week but dropped 3.3% in May, its worst month since September. It retreated 3.5% in 2021. The August contract is currently up $1.40 (+0.08%) an ounce to $1,849.80 and the DG spot price is $1,848.70.
U.S. President Joe Biden met Tuesday with Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen to discuss the historic highs in inflation. Yellen, a former Fed chair, told CNN that she “was wrong about the path that inflation would take,” not anticipating how long it would last. She predicted that a booming labor market would also begin to tighten.
The rate of U.S. inflation measured in the personal consumption price index slowed to 6.3% in April from a 40-year high of 6.6% in March, data released Friday showed. It was the first decline in the index in a year and a half. Consumer spending rose 0.9% in April, separate data from Friday showed.
Investors are awaiting the May U.S. employment report Friday for indications on the state of the labor market.
Most investors expect the Fed to raise rates another half percentage point at policymakers’ next scheduled meeting in June 15, according to the CME’s FedWatch Tool. The central bank increased benchmark rates by half a percentage point earlier this month, in the second rate hike of 2022 and the largest in 22 years. Rate increases are typically considered bearish for gold.
Fed policymakers have indicated that half-percentage-point interest rate increases are likely for their next two meetings, with policy decisions scheduled for June 15 and July 27.
Gold also got some support from ongoing uncertainty around the pandemic, the war in Ukraine and disrupted global supply chains, particularly for commodities. But some support evaporated as China lifted a strict two-month lockdown for COVID-19 in parts of the country.
Front-month silver futures fell 1.9% Tuesday to settle at $21.69 an ounce on Comex. The July futures gained 2% last week. Silver dropped 6.1% in May after losing 8.2% in April. It retreated 12% in 2021. Silver prices are tied to industrial demand. The July contract is currently up $0.202 (+0.93%) an ounce to $21.890 and the DG spot price is $21.97.
Spot palladium decreased 3.2% Tuesday to $2,022.50 an ounce. It jumped 5% last week. The metal lost 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price is just tipped down $13.30 an ounce to $2,023.00.
Spot platinum gained 1.9% Tuesday to $979.80 an ounce. It rose 0.3% last week and 2.3% last month. It lost 9.4% last year. The current DG spot price is up $22.20 an ounce to $1,004.45.
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