Gold Leaps On High CPI

Gold Leaps On High CPI

Gold leaps over $20 an ounce on the news of unexpectedly high consumer price index (CPI). The renewed inflation fears simultaneously drove down equity futures with the Dow dropping over 100 points.

The CPI vaulted 6.2% from a year ago, decidedly higher than the estimated 5.9%. This is the largest annual increase since 1990. On a monthly basis, the CPI increased 0.9% against the 0.6% estimate. Spot gold jumped 0.8% to $1,846.51 per ounce on the news while U.S. gold futures rose 1.1% to $1,851.40. The 10-year Treasury yield also jumped after the report.

Investors now look to the Central Banks for a reaction. The Federal Reserve, the Bank of England and the European Central Bank last week indicated that inflation was likely to be transitory.

December gold futures rose 0.2% Tuesday to settle at $1,830.80 an ounce on Comex, and the front-month contract increased 0.8% in the first two days of the week. Gold advanced 1.5% in October after retreating 3.4% in September. The yellow metal is down 3.4% so far in 2021. The December contract is up $32.60 (+1.78%) an ounce to $1,863.40 and the DG spot price is $1,865.50.

Minneapolis Fed President Neel Kashkari and San Francisco Fed President Mary Daly, considered some of the most dovish of the central bank’s policymakers, said in separate remarks Tuesday that they expect to get more insight by the summer on how the economy will do as it emerges from the pandemic.

The weekly initial jobless claims data was also released this morning. The 267,000 number came in lower than the previous week’s 271,000, but slightly higher than the forecasted 260,000. The jobs report came out a day early this week because the federal government and bond market will be closed Thursday to commemorate Veterans Day.

Earlier Wednesday, data out of China showed producer prices climbed at the fastest pace in 26 years. The PPI jumped 13.5% from a year earlier, according to data from the National Bureau of Statistic, exceeding analyst expectations of a 12.3% gain. The consumer price index also rose at a faster pace than anticipated — 1.5% versus a projected 1.4%. The CPI increased at the fastest pace since September 2020.

December silver futures decreased 0.9% Tuesday to settle at $24.32 an ounce on Comex as the front-month contract rallied 0.7% in the first two days of the week. Silver increased 8.6% last month after dropping 8.2% in September, its fourth consecutive monthly decline. The metal is down 7.9% so far this year. Silver prices are tied to industrial demand. The December contract is up $0.812 (+3.34%) an ounce to $25.130 and the DG spot price is $25.05.

Spot palladium fell 2.7% Tuesday to $2,041.50 an ounce and gaining 0.1% so far this week. It rallied 4.3% in October after declining 23% in September. It’s down 17% so far in 2021. Currently, the DG spot price is up $27.40 an ounce to $2,064.60.

Spot platinum dropped 0.4% Tuesday to $1,064.70 an ounce and is up 2.3% so far this week. The metal rose 6% in October after losing 5.3% in September. It’s down 0.8% so far this year. The DG spot price benefitting from the inflation news, jumping up $29.70 an ounce to $1,094.20.

 

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