Gold Clings to Sunday’s Boost

Gold Clings to Sunday's Boost

Gold clings to the Sunday’s boost resulting from the Group of Seven nations voting to ban new imports of bullion from Russia as a sanction of its invasion of Ukraine.

The U.S., U.K., Japan and Canada will pledge to halt new shipments of the yellow metal at a G-7 meeting this week, with the U.K. ban in particular set to largely shut Russian gold out of global markets because of London’s pivotal role in the international trade of the commodity. But uncertainty over whether the entire G-7 would act in concert as well as bearishness from last week due to pending interest rate hikes kept pressure on the precious metal.

August gold futures fell 0.6% last week to settle at $1,830.30 an ounce on Comex, though the front-month contract gained 50 cents Friday. Gold tumbled 3.3% in May, its worst month since September. It retreated 3.5% in 2021. The August contract is currently slightly down $0.70 (-0.04%) an ounce to $1,829.60 and the DG spot price is $1,830.10.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% Friday to 1,061.04 metric tons, Reuters reported.

Shipments of gold from Russia to London have already mostly dried up in the months since Russia’s invasion of Ukraine, particularly after the London Bullion Market Association removed Russian refiners from its accredited list in March.

A U.K. government statement foreshadowed the pending ban, while the U.S. Treasury Department was expected to issue one from Washington on Tuesday.

Separately, Russia defaulted on its foreign-currency sovereign debt for the first time since 1918, the year after the Communist revolution, amid crippling international sanctions.

Gold has also had some support from the ongoing pandemic and economic uncertainty. The International Monetary Fund slashed its U.S. growth forecast for 2022 on Friday, though said the country would “narrowly” avoid a recession.

Meanwhile, the prospect of escalating interest rates has kept a lid on precious metals prices, as have strength in the dollar and Treasury yields. The Federal Reserve announced a 75-basis-point rate increase, its biggest since 1994, earlier this month to combat the highest U.S. inflation in 40 years. Most economists and investors now expect Fed policymakers to announce a series of sizeable interest-rate increases through the end of the year, including another 75-basis-point increase in July, according to the CME’s FedWatch Tool.

Investors will be closely watching for the release Thursday of the May core personal consumption expenditures index, the Fed’s favorite inflation gauge. GDP data come out Wednesday, and key manufacturing results are scheduled for Friday.

September silver futures decreased 2.4% last week to settle at $21.16 an ounce on Comex, though the front-month contract advanced 0.3% Friday. 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 September contract is currently up $0.161 (+0.76%) an ounce to $21.320 and the DG spot price is $21.34.

Spot palladium rose 3.1% last week to $1,907.50 an ounce after gaining 1.7% Friday. The metal lost 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price is up $45.70 an ounce to $1,945.00.

Spot platinum tumbled 2.6% last week to $917.30 an ounce, though it increased 0.3% Friday. It gained 2.3% last month and lost 9.4% last year. The DG spot price is currently slightly down $2.50 an ounce to $915.20


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