Gold Over $1,800 on Weaker Treasurys

Gold Over $1,800 on Weaker Treasurys

Gold returned over $1,800 overnight on weaker treasurys. The bullion traded near a three-week high early Wednesday as investors awaited this afternoon’s release of the minutes of the Federal Reserve’s last policy meeting for signals on when it might shift its monetary policy.

The weakness in Treasury yields and a dip in the dollar made gold more attractive as an alternate investment. Benchmark 10-year Treasury yields were near their lowest level in more than four months.

August gold futures rose 0.6% Tuesday to settle at $1,794.20 an ounce on Comex. There was no settlement on Comex on Monday in observance of the U.S. Independence Day holiday. The front-month contract has gained 1.3% so far in July. It fell 7% in June in the worst month since November 2016 after advancing 7.8% in May, the best month for the precious metal since July 2020. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 5.3% so far in 2021. The August contract is currently up $8.90 (+0.50%) an ounce to $1,803.10 and the DG spot price is $1,804.20.

The Fed minutes are likely to shed further light on when the central bank will tighten its loose monetary policy, increasing interest rates and scaling back stimulus measures, which would be considered bearish for gold. Investors and some policymakers are concerned about inflation triggered by pandemic stimulus measures. Gold is a traditional hedge against inflation. Atlanta Fed President Raphael Bostic is scheduled to speak on inflation later Wednesday afternoon.

Gold also gained some strength as a hedge against uncertainty as the delta variant of the COVID-19 virus continued to spread globally. That has raised concern about whether the coronavirus pandemic is really winding down.

Activity in the U.S. services industry grew at a moderate pace in July, data released Tuesday showed. In upcoming economic news, U.S. weekly initial jobless claims are due out Thursday. The figures released last week fell to a pandemic-era low of 364,000 last week, beating an estimate of 390,000.

September silver futures retreated 1.2% Tuesday to settle at $26.17 an ounce on Comex. The front-month contract has dropped 2 cents so far this month. Silver fell 6.5% in June after rallying 8.3% in May. The metal rose 47% in 2020 and is down 0.9% so far this year. The September contract is currently up $0.211 (+0.81%) an ounce to $26.385 and the DG spot price is $26.40.

Spot palladium increased 0.3% Tuesday to $2,803.50 an ounce and is up 0.4% so far this month. It retreated 1.8% in June after losing 4.1% in May. It’s up 14% so far in 2021. Currently, the DG spot price is up $41.90 an ounce to $2,850.00.

Spot platinum slipped 0.2% Tuesday to $1,095.80 an ounce. It’s up 1.2% in July. It dropped 9% in June after losing 1.5% in May. The autocatalyst metal is up 1.9% in 2021. The DG spot price is currently up $3.60 an ounce to $1,095.40.


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