Gold falls 1% overnight on a stronger dollar ahead of Fed meeting, but it has clawed back almost $20 an ounce this morning from a low of $1,847 as traders buy the dip. Investors await Wednesday’s meeting of Federal Reserve policy makers for indications on what the central bank will do about rising inflation.
The stronger dollar makes gold more expensive for investors. But the yellow metal is a traditional hedge against inflation, and U.S. consumer prices rose at its fastest pace in 13 years in May, data released last week showed. Economists surveyed by Bloomberg indicated that Fed officials could signal that they will raise interest rates in 2023 and scale back bond purchases, but probably not until August or September. A reaffirmation of the loose monetary policy — with the expectation of additional inflation — would be bullish for gold. The DG spot price is currently down $10.80 an ounce to $1,868.30.
August gold futures fell 0.7% last week to settle at $1,879.60 an ounce on Comex and after dropping 0.9% Friday. The front-month contract advanced 7.8% in May, the best month for the precious metal since July. Gold gained 3% in April and dropped in January, February and March. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 0.8% so far in 2021.
Speculators cut their net long positions in Comex gold in the week ended June 8, according to the weekly Commitments of Traders report released Friday by the U.S. Commodity Futures Trading Commission.
In a decision that may foreshadow the Fed, the European Central Bank last week declined to signal when it may ease off on its pandemic-era stimulus, arguing that high inflation will be temporary and remain below its target. The COVID-19 virus has killed about 3.8 million people worldwide and sickened around 175.9 million.
Investors will be watching this week for news out of a NATO summit Monday and an EU-U.S. summit Tuesday. Wednesday, in addition to the Fed policy decision, a summit will be held between the the U.S. and Russian presidents. U.S. Treasury Secretary Janet Yellen testifies before a House panel on the federal budget Thursday, and the Bank of Japan has a policy decision scheduled for Friday.
In economic news, U.S. retail sales and industrial production for May come out Tuesday, housing starts Wednesday and initial jobless claims Thursday.
July silver futures gained rose 0.9% last week to settle at $28.15 an ounce on Comex. They increased 0.4% Friday. Silver gained 8.3% in May in the best monthly performance since December. The metal advanced 5.5% in April and dropped in February and March. It rose 47% in 2020 and is up 6.6% so far this year.
Spot palladium retreated 2% last week to $2,795.00, though it rose 0.2% Friday. It lost 4.1% in May. It’s up 14% so far in 2021. Currently, the DG spot price is down $23.80 an ounce to $2,765.00.
Spot platinum fell 1.3% last week to $1,157.60 an ounce, though it gained 0.4% Friday. It lost 1.5% in May. The autocatalyst metal is up 7.8% in 2021. The DG spot price for platinum is up $5.70 an ounce to $1,163.50.
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