Gold comes off of one-month low on Monday as concerns about the solvency of Chinese property group, Evergrande, promote risk aversion and investors await this week’s meeting of Federal Reserve policymakers for guidance on when the central bank will begin tapering its bond-buying program.
World markets fear a “Lehman Moment” for China’s Evergrande Group as its shares dropped to a fresh 11-year low in Hong Kong trading Monday. The property developer scrambles to find cash with a looming $150 million in bond coupon payments due later this week.
In response, the Dow Jones opened down 580 this morning.
December gold futures tumbled 2.3% last week to settle at $1,751.40 an ounce on Comex after the precious metal dropped 0.3% Friday. Friday’s was the lowest close for a front-month contract since Aug. 10. Gold is down 3.7% this month after gaining just 90 cents in August. The yellow metal climbed $372 – or 24% – in 2020 because of uncertainty about the economy and the pandemic and is down 7.6% so far in 2021. Currently, the DG spot price is up $5.50 (+0.31%) an ounce to $1,756.9 and the $1,759.40.
Speculators raised their net long positions in Comex gold by 3,856 contracts in the week ended Sept. 14 to 87,395 contracts, according to the weekly Commitments of Traders report released Friday by the U.S. Commodity Future Trading Commission.
Fed policymakers have come under pressure to scale back pandemic stimulus measures sooner rather than later to combat rising inflation levels. Gold is a traditional hedge against inflation, as are the dollar and Treasurys. But strength in the other assets can make it more expensive for investors to hold bullion, pressuring gold prices.
The central bank is expected to begin laying the groundwork for paring stimulus measures imposed to prop up the economy during the pandemic at the meeting of policymakers on Tuesday and Wednesday.
In addition to the Fed, the Bank of Japan is also scheduled to issue a rate decision Wednesday, while the Bank of England’s rate decision is set for Thursday.
Investors also continued to watch the ongoing pandemic for further direction.
December silver futures decreased 6.5% last week to settle at $22.34 an ounce on Comex after the front-month contract lost 2% Friday. Silver is down 7% this month after dropping 6% in August, its third consecutive monthly decline. The metal rose 47% in 2020 and is down 15% 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 down $0.062 (-0.28%) an ounce to $22.275 and the DG spot price is $22.40.
Spot palladium fell 6.1% last week to $2,019.00 an ounce after dropping 1.5% Friday. It’s down 19% so far this month after falling 7% in August. It has lost 18% so far in 2021. Currently, the DG spot price is off by $73.30 an ounce to $1,940.00.
Spot platinum fell 2.2% last week to $947.20 an ounce, though it rose 0.7% Friday. The metal is down 7.6% so far this month and 12% so far this year. The DG spot price is currently down $23.20 an ounce to $925.40.
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