Gold hits one-week high early Wednesday driven by a weaker dollar and positive signs that a new U.S. coronavirus relief package could be back on the table which raises the bullion’s appeal as a hedge against possible inflation.
As a result, spot gold rose 0.6% to $1,825.41 per ounce by 7 am EST, after hitting $1,832.20, its highest since Nov. 24.
On Tuesday, Senate Majority Leader Mitch McConnell urged the U.S. Congress to pass a $1.4 trillion spending bill including coronavirus stimulus, while a bi-partisan group of senators and House members proposed relief measures worth $908 billion.
In testimony before Congress on Tuesday, Federal Reserve Chairman Jerome Powell touted the importance of stimulus measures already in place and said the economic outlook is uncertain.
Front-month gold futures rose 2.1% Tuesday to settle at $1,818.90 an ounce on Comex. The yellow metal closed Monday at $1,780.90, the lowest settlement since July 1. The February contract retreated 1.7% in the first two days of the week. Currently, the February contract is up $2.90 an ounce to $1,822.60 and the DG spot price is $1,820.10.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.3% Tuesday to 1,191.28 metric tons, Reuters reported.
Gold is up $295 — or 19% — so far this year as investors have flocked to gold because of uncertainty from the coronavirus pandemic and the economy.
Investors will be awaiting additional testimony from Powell and Treasury Secretary Steven Mnuchin this week. Pandemic-related lockdowns have sent millions of Americans into unemployment and curbed economic growth. Powell and the Fed have been at odds with the outgoing Trump administration over additional aid.
Investors are also awaiting the key U.S. monthly employment report for November, which is due out Friday. U.S. manufacturing expanded for a seventh month in November, but at a slower pace the in the prior month, according to a report Tuesday by the Institute of Supply Management.
Meanwhile, gold had little reaction to this morning’s release from ADP showing that private payrolls grew at their slowest pace since July during November. Companies hired 307,000 workers for the month, well below the 475,000 estimate from a Dow Jones survey of economists.
The COVID-19 virus has killed 1.48 million people worldwide and sickened 63.8 million. About 22% of the cases — and 18% of the deaths — are in the U.S. The country has almost 13.7 million cases, more than any other nation. The first shipments of Pfizer’s coronavirus vaccine will be delivered Dec. 15, with the Moderna vaccine following on Dec. 22, CNN reported, citing Operation Warp Speed documents.
Front-month silver futures rose 6.6% Tuesday to settle at $24.09 an ounce on Comex. The March contract decreased 6.4% so far this week. The most active contract dropped 4.5% in November after gaining 0.6% in October. DG spot price for silver is currently down $.25 an ounce to $23.78, while the March contract is down $.21 to $23.875.
Spot palladium gained 1.1% Tuesday to $2,431.00 an ounce and is up $2.40 this week. It advanced 8.3% in November after retreating 4.5% in October. Spot platinum climbed 3.7% Tuesday to $1,005.90 an ounce. It increased 3.6% in the first two days of this week. It rose 14% in November after losing 6% in October. The DG spot price for platinum is currently up over $12 an ounce to $1,017.90 and palladium is down over $19 an ounce to $2,410.10.
Copper is making headlines today. Goldman Sachs analysts predict copper could soon test its record high price, saying the bull run for the industrial metal is now “fully underway.” On Tuesday, copper hit its highest level since March 2013, touching $7,719 per metric ton following stronger-than-anticipated manufacturing activity in China and South Korea.
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