Gold hits one-month high in early Wednesday trading as concerns over the conflict in Ukraine and surging inflation continue to drive the market. Spot gold hit $1,979.95 an ounce, the highest since March 14th and has wavered near that mark throughout the trading morning.
This morning, a fresh set of data shows inflation’s continued climb. The producer price index (PPI), which measures wholesale prices, rose 1.4% in March and is up 11.2% from 2021, setting records in data going back to 2010. This follows Tuesday’s report that showed U.S. consumer prices in March increased by the most in 16.5 years. The inflation report bolstered gold and caused Treasury yields to weaken. That also supported the precious metal.
Front-month gold futures rose 1.4% Tuesday to settle at $1,976.10 an ounce on Comex. The June contract increased 1.6% in the first two days of the week. Gold advanced 2.8% in March after gaining 5.8% in February. It gained 6.9% in the first quarter and retreated 3.5% in 2021. Currently, the June contract is up $6.80 (+0.34%) an ounce to $1,982.90 and the DG spot price is $1,981.40.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.2% Tuesday to 1,093.10 metric tons, Reuters reported.
U.S. inflation jumped 8.5% in March, compared with a year earlier, to taking it to the fastest pace in more than 40 years, according to data released Tuesday by the Labor Department. Inflation also increased 1.2% in March from February. The report covered the first full month since energy prices started climbing on the Russian invasion of Ukraine and the Western sanctions imposed in response.
The inflation report increases pressure on the U.S. Federal Reserve to accelerate rate increases to rein in soaring consumer prices. The Fed increased rates by a quarter percentage point at the meeting in mid-March, the first rate hike in more than three years. Many members of the policymaking Federal Open Market Committee have indicated that they would support a half-percentage point rate hike increase in coming months. Higher interest rates typically support the dollar and Treasurys and weaken gold.
The Ukraine war has brought back some haven investors even as the dollar traded near two-year highs in expectation of aggressive interest-rate increases from the Federal Reserve triggered by high inflation. A stronger dollar is typically bearish for gold, because it makes the metal more expensive for holders of other currencies.
Meanwhile, gold continued to attract haven investors because of the pandemic and the war in Ukraine.
U.S. President Joe Biden described Russian atrocities in Ukraine as “genocide” for the first time on Tuesday, an escalation of his rhetoric on the conflict. U.S. officials also said Tuesday that the Biden administration may expand the types of weapons it’s sending to the beleaguered country.
Front-month silver futures increased 3% Tuesday to settle at $25.74 an ounce on Comex. The May futures contract advanced 3.7% in the first two days of the week. Silver gained 3.1% in March after surging 8.8% in February. It rose 7.6% in the first quarter after falling 12% in 2021. Silver prices are tied to industrial demand. The May contract is currently up $0.140 (+0.54%) an ounce to $25.875 and the DG spot price is $25.78.
Spot palladium fell. 2.7% Tuesday to $2,396.00 an ounce. It decreased 1.3% in the first two days of the week. Palladium touched a record $3,440.76 in March. Russia produces about 40% of the world’s palladium, and Russia’s Nornickel is the world’s largest supplier of palladium. The metal dropped 8.5% in March after gaining 5.3% in February. It gained 20% in the first quarter and retreated 22% in 2021. Currently, the DG spot price has jumped $23.70 an ounce to $2,428.00.
Spot platinum fell 0.5% Tuesday to $979.20 an ounce. It dropped 0.4% so far this week. The metal retreated 4.2% in March after advancing 1.7% in February. It increased 2.9% in the first quarter after dropping 9.4% last year. The DG spot price is currently up $10.10 an ounce to $991.50.
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