Gold off one-month high, pushed earlier in the trading day by a rebounding dollar and Treasury yields, then suppressed further by this morning’s Producer Price Index (PPI) report that rose much higher than expected in March. The dollar came off a two-week low in early trading.
March’s PPI increased 1.0%, resulting in the largest annual gain in 9-1/2 years and beating economists’ forecast of .5%. The jump fuels expectations for higher inflation as the economy reopens and revives on massive government funding. The news spurred Treasury yields further.
The yellow metal had been headed for its first weekly rally in three weeks as the dollar and Treasury yields lost ground yesterday after Federal Reserve Chairman Jerome Powell warned that the economic recovery could slow if COVID-19 cases increase.
Front-month gold futures rose 1% Thursday to $1,758.20 an ounce on Comex, and the June contract advanced 1.4% in the first four days of this week. Futures slipped 0.8% in March after posting their worst month since 2016 in February. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic. Currently, the June contract is down $20.30 an ounce to $1,736.70 and the DG spot price is $1,738.20.
Powell, in comments delivered virtually to an International Monetary Fund panel on Thursday, said the Fed has the tools to rein in inflation.
“We would be monitoring inflation expectations very carefully,” he said. “If we see them moving persistently and materially above levels that we’re comfortable with, then we’d react to that.”
Meanwhile, Treasury Secretary Janet Yellen urged major economies around the world to ramp up fiscal stimulus measures to spur the recovery from the COVID-19 pandemic. The COVID-19 virus has killed almost 2.9 million people worldwide and sickened almost 133.8 million. About 23% of the cases — and 19% of the deaths — are in the U.S. The country has almost 31 million cases, more than any other nation.
U.S. initial jobless claims, which have been elevated since the start of the pandemic, unexpectedly rose again last week, according to data released Thursday by the Labor Department.
In upcoming economic events, the March U.S. producer price index data will be released Friday, and the president of the Dallas Fed is scheduled to speak.
May silver futures increased 1.3% Thursday to settle at $25.59 an ounce on Comex. The contract is up 1.9% in the first four days of this week. Silver dropped 7.2% in March after decreasing 1.8% in February, its first retreat in three months. It gained 1.9% in January and 47% in 2020. The May contract is currently down $0.440 an ounce to $25.145 and the DG spot price is $25.11.
Spot platinum gained 0.6% Thursday to $1,237.80 an ounce and has risen 4.5% in the first four days of the week. It was flat in March after rallying 11% in February amid forecasts for higher demand and tighter supplies. The autocatalyst metal rose 0.5% in January and 11% in 2020. Currently, the DG spot price is down $28.00 an ounce to $1,209.90.
Spot palladium added 0.4% Thursday to $2,657.00 an ounce, and it’s down 1% so far this week. Palladium advanced 13% in March. The metal gained 4.9% in February, plummeted 9% in January and rallied 26% in 2020. The DG spot price is up $11 an ounce to $2,665.00.
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