Gold Makes Modest Gains

Gold Makes Modest Gains

Gold makes modest gains as this morning’s PPI numbers show inflation remaining benign. Gold had edged higher earlier Friday as the dollar traded near its lowest level in two and a half years, coronavirus cases surged and a weak U.S. jobs report made it less likely that the economy would quickly recover from the pandemic.

The Producer Price Index released this morning shows a small rise in November, supporting the general opinion that inflation would remain low for now due to the impact on the labor market of the current COVID-19 wave. The PPI edged up 0.1% last month after increasing 0.3% in October, the smallest gain since April.

The yellow metal’s gains on Thursday were tamped down as a group of outside advisers to the U.S. Food and Drug Administration recommended the emergency use of the Pfizer coronavirus vaccine, paving the way for the agency to green light it.

Front-month gold futures slipped $1.10 Thursday to settle at $1,837.40 an ounce on Comex. The February contract lost $2.60 in the first four days of the week. Gold is up more than $300 — or 21% — so far this year as investors have flocked to the metal because of uncertainty from the coronavirus pandemic and the economy. Currently, the February contract is up $3.80 on ounce to $1,841.20 and the DG spot price is $1,837.10..

Equities dipping this morning. The Dow Jones Industrial Average and S&P 500 fell on Friday, possibly headed for their first weekly loss in three weeks, as the outlook for fiscal stimulus remains in question. The opened Dow traded 123 points lower, or 0.4%. The S&P 500 slipped 0.5%, and the Nasdaq Composite dipped 0.6%.

More than 200 U.S. hospitals were at full capacity last week and a third of all hospitals were almost out of ICU space, according to new data from the U.S. Department of Health and Human Services.

The COVID-19 virus has killed more than 1.58 million people worldwide and sickened more than 69.5 million. About 22% of the cases — and 18% of the deaths — are in the U.S. The country has about 15.6 million cases, more than any other nation.

The U.S. Food and Drug Administration is likely to approve the Pfizer vaccine within days, meaning health care workers and nursing home residents — who have first priority — are likely to begin receiving shots early next week.

Meanwhile, Senate Republicans rejected a bipartisan $908 billion economic stimulus proposal, and the House adjourned until next week, further delaying the likelihood of any progress. Stimulus efforts are considered bullish for gold because they typically trigger inflation, and the yellow metal is a traditional hedge against inflation.

Front-month silver futures rose 0.4% Thursday to settle at $24.09 an ounce on Comex, though the March contract dropped 0.7% in the first four days of the week. The most active contract dropped 4.5% in November. The March contract is currently down $0.034 on ounce to $24.060 and the DG spot price is $23.91.

Spot palladium gained 2.2% Thursday to $2,348.00 an ounce and is down 1.1% so far this week. It advanced 8.3% in November. Spot platinum advanced 1.4% Thursday to $1,029.00 an ounce and is down 3.6% this week. It rose 14% in November. The DG spot price for palladium is currently $2,345.50 an ounce, while platinum is $1,011.20.


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