Gold gaining strength on safe-haven demand spurred by rising cases of the omicron variant of the coronavirus. The yellow metal’s rise has braked at $15 an ounce as investors eye the prospect of a U.S. interest rate increase as early as March.
Bullion also remained under pressure as Treasury yields surged and equities were near an all-time high — though tech stocks led a decline Tuesday. But the U.S. had more than 1 million new daily cases of the omicron variant Tuesday, a record for a single day.
Gold’s climb this morning was not impacted by the very positive U.S. economic news on private job growth. American companies made 807,000 new hires in December per ADP. It’s the fastest rise in seven months despite concerns over surging Covid cases – well ahead of the Dow Jones estimate for 375,000 and the November gain of 505,000.
Investors now await Wednesday’s release of the minutes of Federal Reserve policymakers’ December meeting. The central bank announced last month that it was more rapidly scaling back asset purchases and signaled that there could be as many as three interest rate increases next year because of soaring inflation.
February gold futures rose 0.8% Tuesday to settle at $1,814.60 an ounce on Comex. Front-month futures dropped 0.8% in the first two days of the week. Gold advanced 2.9% in December — its best month since May — and climbed 4.1% in the fourth quarter. But it dropped 3.5% in 2021. Currently, the February contract is up $11.20 (+0.62%) an ounce to $1,825.80 and the DG spot price is $1,824.90.
Looking ahead to this week’s economic news, the Labor Department will release jobs data on Friday. Weekly initial jobless claims come out Thursday. Investors are closely watching economic reports for signals on what the Fed will do and how soaring inflation is affecting the economy. U.S. inflation climbed at the fastest pace since 1982 in November.
U.S. manufacturing data for December came in below expectations Tuesday. Factory activity measured by the Institute for Supply Management’s index fell to 58.7 last month, the lowest level since January 2021. Readings above 50 indicate expansion.
March silver futures increased 1.1% Tuesday to settle at $23.06 an ounce on Comex. The front-month contract dropped 1.3% in the first two days of the week. Silver gained 2.4% in December and 5.9% in the fourth quarter, though it dropped 12% in 2021. Silver prices are tied to industrial demand. The March contract is currently up $0.124 (+0.54%) an ounce to $23.180 and the DG spot price is $23.17.
Spot palladium rose 2.4% Tuesday to $1,880.00 an ounce but remains down 1.8% so far this week. It rallied 9.6% in December, but it fell 0.4% in the fourth quarter and 22% in 2021. A global shortage of semiconductor chips means auto production is down, which has pressured demand for the metal. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. Currently, the DG spot price is up $34.80 an ounce to $1,907.50.
Spot platinum advanced 1.9% Tuesday to $979.40 an ounce, and it’s up 0.7% in the first two days of this week. The metal gained 2.9% in December and 0.2% in the fourth quarter. It lost 9.4% last year. The DG spot price is currently in positive territory, up $22.90 an ounce to $1001.10.
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