Gold Little Changed Near $1,800

Gold Little Changed Near $1,800

Gold was little changed near $1,800 an ounce early Wednesday after U.S. data revealed that inflation grew at a slower pace than economists had expected in August, putting the pace of Federal Reserve actions to taper stimulus into question.

The smaller-than-anticipated increase in the consumer price index was expected to give Fed policymakers more flexibility on their timetable to reduce asset purchases and eventually raise interest rates. Gold rose after the CPI data came out Tuesday and the dollar and Treasury yields slipped. The Federal Open Market Committee is scheduled to meet next week. Last week, the European Central Bank announced it was slowing its bond purchases because of a surge in inflation.

December gold futures rose 0.7% Tuesday to settle at $1,807.10 an ounce on Comex and the precious metal gained 0.8% in the first two days of the week. Gold is down 0.6% this month after gaining just 90 cents in August. The yellow metal climbed $372 – or 24% – in 2020 because of uncertainty about the economy and the pandemic and is down 4.6% so far in 2021. The December contract is down currently $8.80 (-0.49%) an ounce to $1,798.30 and the DG spot price is $1,797.10.

Consumer prices rose 5.3% in August, compared with a year earlier, and 0.3% from July, the Labor Department reported Tuesday. That compares with analyst expectations of a 5.4% annual rise and a 0.4% gain on the month.

Fed policymakers have come under pressure to scale back pandemic stimulus measures sooner rather than later to combat rising inflation levels. Gold is a traditional hedge against inflation, as are the dollar and Treasurys. But the weakness in the other assets Tuesday make it less expensive for investors to hold bullion, boosting gold prices.

In upcoming economic news, the U.S. industrial production data come out on Wednesday, while Thursday brings the release of the weekly U.S. initial jobless claims. Data released last week showed initial jobless claims were at a pandemic-era low. Investors are also watching the unfolding pandemic.

December silver futures increased 0.4% Tuesday to settle at $23.89 an ounce on Comex, though the front-month contract is down 1 cent in the first two days of the week. Silver is down 0.5% this month after dropping 6% in August, its third consecutive monthly decline. The metal rose 47% in 2020 and is down 9.6% so far this year. Silver prices are tied to industrial demand, which could taper if lockdowns are reinstated and dampen manufacturing. The December contract is up $0.020 (+0.08%) an ounce to $23.905 and the DG spot price is $23.93.

Spot palladium tumbled 5.8% Tuesday to $1,983.00 an ounce, the lowest level in more than a year. It’s down 7.8% so far this week and 20% so far this month after falling 7% in August. It has lost 19% so far in 2021. Currently, the DG spot price is up $7.40 an ounce to $2,022.50.

Spot platinum decreased 1.8% Tuesday to $952.70 an ounce. It’s down 1.6% this week, 7.1% so far this month and 11% so far this year. The DG spot price is currently down $5.60 an ounce to $948.10.


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