Gold pauses its seven-day inflation fueled rally, trading in a narrow range over $1,850 an ounce. The bullion slipped from a five-month high early Monday on profit taking and strength in the dollar.
The yellow metal had little reaction to this morning’s positive economic news out of New York State. The NY Fed’s Empire State Manufacturing Index for November climbed to 30.9 from 19.8 in October, a much larger than forecast rise. Economists had expected a rise to 21.6.
The U.S. dollar index was near a 16-month high. Since gold is priced in dollars, a stronger dollar increases its cost to those holding other currencies.
Escalating inflation continued to be a factor for investors, who historically have used gold, the dollar and Treasurys as hedges against inflation. But gold has largely taken a backseat to the other assets for most of this year. Inflation may spur global central banks, including the Federal Reserve, to boost interest rates, which would also be bearish for gold.
December gold futures rose 2.9% last week to settle at $1,868.50 an ounce on Comex after the front-month contract gained 0.3% Friday. Gold advanced 1.5% in October after retreating 3.4% in September. The yellow metal is down 1.4% so far in 2021. The December contract is down $3.40 (-0.18%) an ounce to $1,865.10 and the DG spot price is $1,866.30.
Minneapolis Fed President Neel Kashkari said Sunday reiterated the central bank’s stance that the Fed shouldn’t overreact to high inflation, which may be temporary.
“We need to take it very seriously, but my view is we also need to not overreact to some of these temporary factors even though the pain is real,” he said Sunday on CBS’s “Face the Nation.”
U.S. consumer prices jumped 6.2% in October, the biggest surge in more than 30 years, amid higher prices for energy, housing and transportation, the Labor Department reported Wednesday.
Also on “Face the Nation” Sunday, Treasury Secretary Janet Yellen said that controlling the COVID-19 virus is the key to reining in inflation.
“If we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do,” she said.
In economic news this week, the U.S. retail sales and industrial production for October comes out on Tuesday. Housing starts come out Wednesday, and Thursday brings weekly initial jobless claims and the index of leading economic indicators for October.
December silver futures increased 4.9% last week to settle at $25.35 an ounce on Comex. The front-month contract rallied 0.2% Friday. Silver rose 8.6% last month after dropping 8.2% in September, its fourth consecutive monthly decline. The metal is down 4% so far this year. Silver prices are tied to industrial demand. The December contract is down $0.241 (-0.95%) an ounce to $25.105 and the DG spot price is $25.38.
Spot palladium gained 4.8% last week to $2,137.00 an ounce and rising 3.1% Friday. It rallied 4.3% in October after declining 23% in September. It’s down 13% so far in 2021. Currently, the DG spot price is back over $2,100…climbing $52.40 an ounce to $2,132.00.
Spot platinum advanced 5% last week to $1,093.00 an ounce, though it fell 0.2% Friday. The metal rose 6% in October after losing 5.3% in September. It’s up 1.8% so far this year. The DG spot price is currently down $5.80 an ounce to $1,090.10.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.