Gold slips off of the six-week high it hit earlier in today’s trading, but it’s sticking above $1,800. The yellow metal dropped when stronger bond yields and surging equities overcame lingering risk aversion due to the continued spread of the omicron variant of the coronavirus.
The bullion’s six-week high took the February futures to $1,833.00 an ounce earlier Monday, only to see it drop $28 an ounce as the U.S. dollar strengthened and crude oil prices fell on the first day of 2022 trading.
Investors now look to key December manufacturing data from major economies, including the U.S. on Tuesday. December’s U.S. monthly jobs report is also due out Friday. Both economic reports may help determine whether the U.S. Federal Reserve follows through on hawkish monetary policy plans revealed earlier this month to tackle escalating inflation.
February gold futures rose 0.9% last week to settle at $1,828.60 an ounce on Comex after front-month futures gained 0.8% Friday. Gold advanced 2.9% in December — its best month since May — and climbed 4.1% in the fourth quarter. But it dropped 3.5% in 2021. The February contract is currently down $18.70 (-1.02%) an ounce to $1,809.90 and the DG spot price is $1,808.50.
Gold has gotten a boost in recent weeks from investors seeking to hedge risk from high inflation and the global spread of the omicron variant of the coronavirus. Infection rates are surging around the world, even among vaccinated individuals, but so far cases have proven less severe than previous variants. Worldwide infections hit a record high over the seven days between Dec. 24 and 30, according to Reuters.
In other economic news this week, investors will be watching for the monthly U.S. jobs reports from ADP on Wednesday and the Labor Department on Friday. Weekly initial jobless claims come out Tuesday.
The Fed will also release the minutes Wednesday of its December meeting, at which the central bank more rapidly scaled back asset purchases and signaled that there could be as many as three interest rate increases next year because of soaring inflation. The latest U.S. inflation data from showed it climbing at the fastest pace since 1982 in November. Higher interest rates could ultimately be bearish for gold because they make the precious metal less attractive as an alternate investment.
March silver futures increased 1.8% last week to settle at $23.35 an ounce on Comex after the front-month contract climbed 1.3% Friday. Silver gained 2.4% in December and 5.9% in the fourth quarter, though it dropped 12% in 2021. Silver prices are tied to industrial demand. The March contract is currently down $0.511 (-2.21%) an ounce to $22.610 and the DG spot price is $22.85.
Spot palladium slid 2.1% last week to $1,915.00 an ounce after losing 4.1% Friday. It rallied 9.6% in December, but it fell 0.4% in the fourth quarter and 22% in 2021. A global shortage of semiconductor chips means auto production is down, which has pressured demand for the metal. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. Currently, the DG spot price is off $19.60 an ounce to $1,907.50.
Spot platinum retreated 0.9% last week to $973.10 an ounce, though it rose 0.4% Friday. The metal gained 2.9% in December and 0.2% in the fourth quarter. It lost 9.4% last year. The DG spot price is down $22.10 an ounce to $950.60.
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