Gold was little changed near a four-week high early Monday, holding onto gains triggered Friday by comments from Federal Reserve Chairman Jerome Powell that a taper of the central bank’s economic support wouldn’t necessarily be linked to an increase in interest rates.
While Powell said the Fed could begin reducing monthly bond purchases this year because the economy has met the central bank’s substantial further progress” test, he also said that “the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test.”
Powell’s comments at the Fed’s annual conference typically held in Jackson Hole, Wyoming, but virtual this year, sent gold futures up 1.4% Friday to settle at the highest level since Aug. 2. Low interest rates are typically bullish for gold.
December gold futures rose 2% last week to settle at $1,819.50 an ounce on Comex. The precious metal advanced $24.30 Friday. Gold is up 0.1% so far this month after increasing for the third time in four months in July. The yellow metal climbed $372 – or 24% – in 2020 because of uncertainty about the economy and the pandemic and is down 4% so far in 2021. The December contract is down slightly down $3.30 (-0.18%) an ounce to $1,816.20 and the DG spot price is $1,814.50.
Speculators raised their net long positions on Comex gold and silver in the week ended Aug. 24, according to the U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report, released Friday.
December silver futures gained 4.1% last week to settle at $24.11 an ounce on Comex. The front-month contract increased 2.2% Friday. Silver has lost 5.6% so far this month after dropping 2.5% in July. The metal rose 47% in 2020 and is down 8.7% 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 currently up $0.055 (+0.23%) an ounce to $24.165 and the DG spot price is $24.10.
U.S. July personal income and spending increased in July, according to data released Friday, supporting the Fed’s rosier view of the economy. Personal income rose 1.1% from the month earlier, while spending gained 0.3%, Commerce Department data showed.
The improvements in the economy came despite the worsening pandemic, reignited in recent weeks by the spread of the delta variant. Hospitals in some parts of the country are running out of oxygen as well as beds following a surge in new COVID-19 patients.
Investors will be watching this week for monthly data on global manufacturing as well as the August U.S. employment report for further direction.
Uncertainty caused by the pandemic and other geopolitical events — such as the unrest in Afghanistan and Hurricane Ida’s hit on the U.S. Gulf Coast — is also supporting prices of gold, often a safe haven investment.
Spot palladium rallied 6.3% last week to $2,428.00 an ounce and rose 0.7% Friday. It’s down 9.2% in August and has lost 0.9% so far in 2021. Currently, the DG spot price is up a commanding $56.90 an ounce to $2,485.00.
Spot platinum gained 1.5% last week to $1,017.60 an ounce and advanced 3.1% Friday. The metal has decreased 3.8% in August and is down 5.2% in 2021. The DG spot price is currently down $2.40 an ounce to $1,014.80.
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