Gold inched higher early Wednesday on a pledge from Federal Reserve Chairman Powell. He stressed the Fed will keep interest rates near zero for some time, making the yellow metal more attractive as an alternative investment.
Investors were skittish last week — causing gold to drop 5.9% — after the central bank signaled that it might consider tapering its loose monetary policy sooner than previously anticipated to combat inflation, even as the economy rebounds from the COVID-19 pandemic. Gold is a traditional hedge against inflation.
“We will not raise interest rates preemptively because we fear the possible onset of inflation,” Powell said Tuesday at a congressional hearing. “We will wait for evidence of actual inflation or other imbalances.”
August gold futures fell 0.3% Tuesday to settle at $1,777.40 an ounce on Comex. The front-month contract gained 0.5% in the first two days of this month. It’s down 6.7% so far this month after advancing 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 6.2% so far in 2021. The August contract is currently up $5.70 an ounce to $1,777.40 and the DG spot price is $1,783.20.
In his remarks Tuesday, Powell also said that price increases in the marketplace would probably wane as the economy fully reopens after pandemic closures. His comments caused the dollar to strengthen, which put a cap on gold’s advance.
The COVID-19 virus has killed about 3.88 million people worldwide and sickened around 179.1 million. The U.S. has had more cases than any other nation, but domestic levels are dropping as vaccination becomes more widespread.
In other economic news, investors will likely watch for June manufacturing and new home sales data Wednesday, weekly initial jobless claims Thursday and May personal income, consumer spending and personal consumption data Friday.
September silver futures dropped 0.6% Tuesday to settle at $25.90 an ounce on Comex. The front-month contract lost 0.3% in the first two days of the week. 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 down 2% so far this year. The September contract is currently up $0.112 an ounce to $26.010 and the DG spot price is $25.98.
Spot palladium decreased 0.4% Tuesday to $2,576.00 an ounce and is up 4% so far this week. It lost 4.1% in May and is up 5.1% so far in 2021. Currently, the DG spot price is up $42.10 an ounce to $2,620.00.
Spot platinum rose 1.8% Tuesday to $1,082.90 an ounce and advanced 3.2% the first two days of this week. It lost 1.5% in May. The autocatalyst metal is up 0.9% in 2021. The DG spot price is up $15.10 an ounce, currently, to $1,096.80.
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