Gold falls this morning on strong dollar that hit a 3-month high. The yellow metal slumped $17 an ounce briefly, but spot gold is once again challenging $1,700.
Gold had risen in the early hours of the trading day as U.S. Treasury yields slipped and the passage of a U.S. stimulus measure made the yellow metal more attractive to investors anticipating inflation.
Treasury yields climbed to a one-year high Friday, and their advance has pressured gold, as the two assets are typically inversely correlated. Gains in yields are seen as bearish for gold because they increase the opportunity cost of holding bullion. But yields, gold and the dollar are all traditional hedges against inflation.
April gold futures dropped 1.8% last week to settle at $1,698.50 an ounce on Comex after decreasing 0.1% Friday. It was the metal’s third weekly decline and added to a drop in February, which was the worst month for gold since 2016. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic. The April contract is currently off by $6 to $1,692.20 and the DG spot price is $1,695.10.
U.S. President Joe Biden’s $1.9 trillion pandemic relief package passed the U.S. Senate on Saturday after an earlier version cleared the House of Representatives the weekend before. But only Democrats supported the measure, meaning that any future legislation is likely to be contentious. The House is expected to pass the Senate version of the bill within the next few days and send it to Biden to sign into law.
The measure is designed as a shot in the arm to the U.S. economy and labor force, which are still reeling from the coronavirus pandemic, one year on.
The U.S. economy gained a better-than-expected 379,000 jobs in February, and the unemployment rate fell to 6.2% from 6.3%, according to data released Friday by the Labor Department. But around 4 million people have been out of work for 27 weeks or longer.
The COVID-19 virus has killed more than 2.59 million people worldwide and sickened more than 116.8 million. About 25% of the cases — and 20% of the deaths — are in the U.S. The country has almost 29 million cases, more than any other nation.
Investors will be watching for core U.S. inflation data on Wednesday and weekly initial jobless claims figures on Thursday for further economic indicators.
May silver futures decreased 4.4% last week to settle at $25.29 an ounce on Comex after losing 0.7% Friday. The metal decreased 1.8% in February, its first retreat in three months. Silver gained 1.9% in January and 47% in 2020. The May contract is currently up $0.048 an ounce to $25.335 and the DG spot price is $25.01.
Spot platinum retreated 4.9% last week to $1,136.90 an ounce after slipping 0.3% Friday. The metal rallied 11% in February amid forecasts for higher demand and tighter supplies. The autocatalyst metal advanced 0.5% in January and 11% in 2020. Currently, the DG spot price is up over $15 an ounce to $1,150.00
Spot palladium rose 0.7% last week $2,355.00 an ounce, though it slipped 0.4% Friday. It gained 4.9% in February after plummeting 9% in January and rallying 26% in 2020. The DG spot price is currently down $20 an ounce to $2,339.90.
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