Gold was rangebound caught between stronger dollar that pressured the precious metal, while haven demand related to the war in Ukraine bolstered it. The yellow metal does appear headed for a weekly rally.
The U.S. currency traded near a two-year high against a basket of currencies and was heading for its best week in a month. The dollar has gotten a boost from expectations of aggressive upcoming interest-rate hikes from the Federal Reserve triggered by high inflation. A stronger dollar is typically bearish for gold, because it makes the metal more expensive for holders of other currencies. But the underlying inflation — at 40-year highs — supports the yellow metal.
Front-month gold futures rose 0.7% Thursday to settle at $1,937.80 an ounce on Comex, and the June contract increased 0.7% in the first four days of the week. Gold advanced 2.8% in March after gaining 5.8% in February. It gained 6.9% in the first quarter and retreated 3.5% in 2021. The June contract is currently down slightly, off $0.10 (-0.01%) an ounce to $1,937.70 and the DG spot price is $1,936.10.
Minutes of the March meeting by Fed policymakers, released Wednesday, indicated that the central bank would begin reducing its balance sheet by $95 billion a month, likely beginning with the May meeting. Many of the policymakers also were on record in support of a half-percentage point interest-rate increase in coming months. The Fed increased rates by a quarter percentage point at the meeting in mid-March, the first rate hike in more than three years.
“The opposing forces of inflation and rising rates will likely be the strongest influences on gold in the second quarter,” the World Gold Council said in a report.
Rate hikes are typically bearish for gold and bullish Treasurys and the dollar. Benchmark 10-year U.S. Treasury yields touched a three-year high in Thursday’s session, also pressuring gold.
Gold continued to attract haven investors because of the war between Russia and Ukraine and the spread of coronavirus omicron variant BA.2.
Front-month silver futures increased 1.1% Thursday to settle at $24.74 an ounce on Comex, though the May futures contract was up just 0.3% for the week. Silver gained 3.1% in March after surging 8.8% in February. It rose 7.6% in the first quarter after falling 12% in 2021. Silver prices are tied to industrial demand. The May contract is currently down $0.160 (-0.65%) an ounce to $24.575.
Spot palladium rallied 1.5% Thursday to $2,254.50 an ounce, and it decreased 1.8% in the first four days of the week. It touched a record $3,440.76 in March. Russia produces about 40% of the world’s palladium, and Russia’s Nornickel is the world’s largest supplier of palladium. The metal dropped 8.5% in March after gaining 5.3% in February. It gained 20% in the first quarter and retreated 22% in 2021. Currently, the DG spot price has leapt up $189.90 an ounce to $2,443.00.
Spot platinum rose 1.1% Thursday to $970.80 an ounce, though it’s down 2.2% so far this week. The metal dropped 4.2% in March after advancing 1.7% in February. It increased 2.9% in the first quarter after dropping 9.4% last year. The DG spot price is currently up $12.90 an ounce to $978.10.
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