Gold gains early Monday, continuing its rebound from near the lowest level in more than three months, on a weaker dollar and geopolitical uncertainty.
A near-coup d’état challenging Vladimir Putin’s rule in Russia fizzled out over the weekend but may have left him weakened. While global markets remain relatively calm, developments in Russia have the potential to attract haven investors into gold. But anticipation of additional Federal Reserve interest rate increases has maintained pressure on gold, as rate hikes are typically bearish for the yellow metal.
August gold futures dropped 2.1% last week to settle at $1,929.60 an ounce on Comex, though it rose 0.3% Friday. Bullion is down 2.7% this month after retreating 0.9% in May and increasing 0.6% in April. The metal fell $2.40 in 2022. The August contract is currently up $10.9 (+0.56%) an ounce to $1940.50 and the DG spot price is $1930.00.
Some Russia experts have said that while Putin held onto power in Russia this weekend, he emerged from the incident looking weak, and that could make him a target for other threats to his authority. In the agreement that ended the mutiny staged by Yevgeny V. Prigozhin, the leader of the Wagner paramilitary group, Prigozhin agreed to go into exile in Belarus to evade prosecution. But the fact that his troops came close to Moscow signals that “we’ve seen more cracks emerge in the Russia façade,” U.S. Secretary of State Antony Blinken said on NBC’s Meet the Press.
The unrest in Russia may also have an impact on the platinum market, since the country is the world’s second-largest producer of the metal in 2022. Russia is also a primary source of palladium.
Spot platinum tumbled 6.5% last week to $927.60 an ounce after falling 0.3% Friday. Platinum is down 7.8% in June after retreating 7.4% in May and adding 8.5% in April. Platinum surged 10% in 2022. The DG spot price is currently up $2.60 an ounce to $931.30.
But most investors remained fixated on the state of the economy and the Fed’s next moves. The central bank left its benchmark federal funds rate at 5.00% to 5.25% earlier this month, its first pause after 10 consecutive rate increases to combat inflation That triggered speculation about whether the hikes were over or if there were more to come.
San Francisco Fed President Mary Daly said in an interview with Reuters Friday that two more interest rate hikes this year is a “very reasonable projection.”
About 71.9% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at its July monetary policy meeting, while 28.1% expect it to keep rates unchanged. The Fed has increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022.
September silver futures dropped 7.4% last week to settle at $22.55 an ounce on Comex after the most-active contract slipped 0.5% Friday. Silver is down 4.4% in June after decreasing 6.5% in May and gaining 4.4% in April. It rose 3% in 2022. The September contract is up $0.476 (+2.11%)an ounce to $23.025 and the DG spot price is $22.78.
Spot palladium decreased 9.5% last week to $1,305.00 an ounce, though it increased 0.7% Friday. Palladium is down 5.6% this month after falling 9.3% in May and rising 2% in April. Palladium lost 5.7% in 2022. The DG spot price is currently up $37.00 an ounce to $1338.00.
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