Gold dips this morning ahead of Fed decision. Investors await the results of this week’s meeting of Federal Reserve policymakers for guidance on when the central bank will begin tapering its bond-buying program.
In addition to the timetable of the stimulus taper, the central bank is likely to provide indications on when it may begin boosting interest rates when Fed Chairman Jerome Powell addresses the media at 2:30 ET. Watch for volatility in all markets.
December gold futures rose 0.8% Tuesday to settle at $1,778.20 an ounce on Comex, bring the precious metal’s two-day gain this week to 1.5%. Friday’s was the lowest close for a front-month contract since Aug. 10. Gold is down 2.2% this month after gaining just 90 cents in August. The yellow metal climbed $372 – or 24% – in 2020 because of uncertainty about the economy and the pandemic and is down 6.2% so far in 2021. The December contract is currently down $2.00 (-0.11%) an ounce to $1,776.20 and the DG spot price is $1,777.20.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.1% Tuesday to 1,000.79 metric tons, Reuters reported.
Fed policymakers have come under pressure to scale back pandemic stimulus measures sooner rather than later to combat rising inflation levels. Gold is a traditional hedge against inflation, as are the dollar and Treasurys.
Fed Chairman Jerome Powell is set to speak after the end of the meeting and again on Friday as he, Fed Governor Michelle Bowman and Vice Chairman Richard Clarida discuss the pandemic recovery, which investors are also continuing to watch for further direction.
Earlier Wednesday, the Bank of Japan kept its monetary policy steady and interest rates unchanged. The central bank is expected to maintain its massive stimulus even as its counterparts in other countries consider tapering. The Bank of England is scheduled to issue a rate decision and guidance on Thursday.
December silver futures increased 1.8% Tuesday to settle at $22.61 an ounce on Comex, and the the front-month contract is up 1.2% for the first two days of the week. Silver is down 5.8% this month after dropping 6% in August, its third consecutive monthly decline. The metal rose 47% in 2020 and is down 14% so far this year. Silver prices are tied to industrial demand, which could taper if lockdowns are reinstated and dampen manufacturing. The December contract is up $0.174 an ounce (+0.77%) to $22.785 and the DG spot price is $22.86.
Spot palladium traded at $1,937 an ounce and is down 4.1% for the week. It has lost 22% so far this month after falling 7% in August. It has retreated 21% so far in 2021. Once again, the DG spot price is over $2,000 an ounce. The current spot is up $88.00 an ounce to $2,017.50.
Spot platinum traded at $965.10 an ounce and is up 1.9% so far this week. The metal is down 5.9% so far this month and 10% so far this year. The DG spot price is over $1,000 once again. It is currently up $40.20 an ounce, to $1,000.50.
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