Gold jumps higher on inflation news. Early Wednesday gains were sparked by the June U.S. inflation report, released Tuesday, showed consumer prices jumped the most since 2008 and beat all estimates. The just released Producer Price Index gave the yellow metal a further bump.
The PPI for June increased 1.0% after rising 0.8% in May, per the Labor Department. In the past 12 months, the PPI leapt 7.3%, the biggest year-on-year rise since in November 2010. The street had forecast a 0.6% increase for June.
Gold jumped over $10 an ounce on the PPI report, but has since drifted down a bit on Federal Reserve Chairman Jerome Powell’s testimony this morning before Congress. Powell said the economy is “a ways off” from where it needs to be for the central bank to change policy.
August gold futures rose 0.2% Tuesday to settle at $1,809.90 an ounce Tuesday on Comex. The front-month contract, which is trading near a four-week high, slipped 70 cents in the first two days of this week. Gold has increased 2.2% so far in July. It fell 7% in June in the worst month since November 2016 after advancing 7.8% in May, the best month for the precious metal since July 2020. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 4.5% so far in 2021. The August contract is currently up $12.80 (+0.71%) an ounce to $1,822.70 and the DG spot price is $1,822.30.
The U.S. consumer price index jumped 0.9% in June and 5.4% from the same month last year, according to data released Tuesday by the Labor Department. The “core CPI,” which excludes food and energy increased 4.5%, the biggest gain since November 1991.
In addition to Powell’s testimony, investors will be watching later this week for indications on the state of the labor market. U.S. weekly initial jobless claims unexpectedly increased in the latest report, signaling that growth in the job market may be slowing, though new applications for unemployment benefits fell to a pandemic-era low in the previous week’s data.
Investors will also closely watch political developments in Washington after Senate Democrats announced plans late Tuesday for a $3.5 trillion budget package — a historic amount of government spending likely to draw opposition from Republicans.
But elsewhere, the rapid spread of the delta variant of the coronavirus is forcing new shutdowns in parts of Europe, and that has increased concern that the pandemic isn’t over yet. That type of uncertainty has made gold more attractive as a risk-off trade.
September silver futures retreated 0.4% Tuesday to settle at $26.14 an ounce on Comex. The front-month contract is also down 0.4% in the first two days of this week and 0.2% so far this month. Silver fell 6.5% in June after rallying 8.3% in May. The metal rose 47% in 2020 and is down 1% so far this year. The September contract is currently up $0.24 (+0.92%) an ounce to $26.380 and the DG spot price is $26.29.
Spot palladium decreased 1% Tuesday to $2,842.00 an ounce, but is up 0.6% so far this week. It retreated 1.8% in June after losing 4.1% in May. It’s up 16% so far in 2021. The DG spot price is currently down $6.00 an ounce to $2,836.50.
Spot platinum dropped 1% Tuesday to $1,117.90 an ounce, though it’s up 0.9% in the first two days of this week and 3.4% so far in July. It dropped 9% in June after losing 1.5% in May. The autocatalyst metal is up 4.1% in 2021. The DG spot price is up $23.10 an ounce to $1,142.40.
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