Gold loses overnight gains as St. Louis Fed President James Bullard told CNBC this morning that he sees an initial interest rate increase happening in 2022 — faster than the expected first increase in 2023.
The yellow metal had rebounded overnight after Thursday’s drop that was precipitated by Federal Reserve comments. The Fed signaled it was considering tapering pandemic stimulus efforts sooner than previously anticipated with at least two interest rate hikes are likely in 2023. The Fed DID hold rates near zero at a Wednesday’s policy meeting. Rate increases are typically bearish for precious metals because they increase the opportunity cost of holding them.
August gold futures fell 4.7% Thursday to settle at $1,774.80 an ounce on Comex, and the yellow metal is down 5.6% so far this week. The front-month contract advanced 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 6.4% so far in 2021. The August contract is currently down $1.70 an ounce to $1,773.10 and the DG spot price is $1,774.70.
The Dow opened 400 down at the opening bell this morning as it heads for its worst week since January. The S&P and Nasdaq dropped this week as well, more than 1% and 0.5% respectively.
The Fed said the U.S. COVID-19 vaccination effort and “strong policy support” have caused indicators of economic activity and employment to strengthen, though inflation has risen. But the economic outlook remains linked to “the course of the virus.”
The COVID-19 virus has killed about 3.84 million people worldwide and sickened around 177.4 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 on Wednesday, U.S. housing starts rose less than expected in May, according to data released by the Commerce Department.
July silver futures dropped 7% Thursday to settle at $25.89 an ounce on Comex. They are down 8.1% in the first four 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 2.1% so far this year. The July contract is currently up $0.144 an ounce to $26.000 and the DG spot price is $26.06.
Spot palladium decreased 11% Thursday to $2,537.00 and is down 9.2% so far this week. It lost 4.1% in May. It’s up 3.5% so far in 2021. The DG spot price is currently up $19.30 to $2,550.00.
Spot platinum fell 7.7% Thursday to $1,060.00 an ounce and is down 1.3% in the first four days of the week. It lost 1.5% in May. The autocatalyst metal is down 1.3% in 2021. Currently, the DG spot price is up $4.30 to $1,068.50.
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