Gold dips below $1,900 an ounce as the dollar traded near the highest level in almost two months after Federal Reserve President Jerome Powell testified that the economy’s path is “highly uncertain.”
Economic headlines keep exciting gold volatility. A stronger dollar is typically bearish for gold. But Powell also pledged that the Fed would provide aid to the economy “for as long as it takes,” and stimulus measures are usually bullish. Still, Chicago Fed President Charles Evans said that interest rates could rise before the Fed’s inflation target is reached, further pressuring gold. Look for additional economic doubts out of England as talk of a second full lockdown spread due to skyrocketing COVID spread.
Gold futures slipped 0.2% Tuesday to settle at $1,907.60 an ounce on Comex. The December contract decreased 2.8% in the first two days of the week. Gold is still up almost $400 — or 25% — so far this year as investors have flocked to gold because of uncertainty from the coronavirus pandemic and the economy. Currently, the December contract is $1,886.50 an ounce, while the DG spot price is $1,886.50.
“We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy,” Powell said in testimony Tuesday before the House Financial Services Committee, He will make three appearances on Capitol Hill this week. Evans, Boston Fed President Eric Rosengren, Atlanta Fed President Raphael Bostic and Fed Vice Chair Randal Quarles are also scheduled to speak Wednesday.
The Fed indicated last week that it would keep interest rates near zero for some time as the economic impact of the pandemic has decimated global economic growth and cost millions of Americans their jobs.
Adding to the tug-of-war of bullish and bearish news for the market, the U.S. crossed the threshold of 200,000 deaths from the novel coronavirus on Tuesday, increasing uncertainty, while lawmakers reached an agreement to keep the government funded through early December and avoid a government shutdown before the November election.
The virus known as COVID-19 has killed almost 969,000 people worldwide and sickened 31.5 million. About 22% of the cases — and 21% of the deaths — are in the U.S. The country has 6.9 million cases, more than any other nation.
U.S. President Donald Trump addressed the United Nations General Assembly on Tuesday and ramped up rhetoric against China by saying that Beijing must be held accountable for having “unleashed” COVID-19 on the world. China accused him of “lies.” A trade standoff between the two countries sent precious metals soaring last year.
Silver futures gained 0.7% Tuesday to settle at $24.52 an ounce on Comex, but the December contract is down 9.6% in the first two days of the week. The most active contract is down 14% this month after gaining 18% in August and soaring 30% in July. The December contract is currently $23.575 an ounce, while the DG spot price is $23.59.
Spot palladium fell 1.8% Tuesday to $2,237.60 an ounce and is down 6.1% so far this week. Spot platinum declined 1.3% Tuesday $874.50 an ounce and has declined 6.7% so far this week. Currently, the DG spot price for palladium is $2,284.50 and platinum is $860.10.
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