Gold Rebounds After Slipping On Fed Comments

Gold Rebounds After Slipping On Fed Comments

Gold rebounds early Wednesday after slipping near a one-month low in the previous session on Fed comments showing a decided hawkish direction. The yellow metal shrugged off this morning’s positive job numbers.

U.S. Companies added a strong number of jobs for November, seeming unfazed by rising inflation and the threat of a winter wave of covid cases, per the payroll processing firm ADP. Private jobs jumped by 534,000, better than the Dow Jones estimate of 506,000 in an apparently tightening labor market.

February gold futures dropped 0.5% Tuesday to settle at $1,776.50 an ounce on Comex. The front-month contract dropped 0.7% in the first two days of the week. Gold dropped 0.4% in November after advancing 1.5% in October. The yellow metal is down 6.3% so far in 2021. Currently, the February contract is up $10.30 (+0.58%) to $1,786.80 and the DG spot price is $1,790.00.

Powell indicated Tuesday that soaring inflation was unlikely to be temporary and said that central bank policymakers would discuss tapering monthly bond purchases “a few months sooner” than anticipated, potentially opening the door to interest rate hikes. A rate increase would make gold a less attractive asset for investors.

“It’s probably a good time to retire” the word “transitory” to describe inflation, Powell said in testimony before a Senate panel Tuesday. Inflation has been climbing at the fastest pace in three decades. Treasury yields rose on his comments, further pressuring gold, which fell along with equities on Tuesday.

Powell is set to testify before a House panel Wednesday, and the Fed’s Beige Book report from the 12 regional banks will be released. The San Francisco Fed’s Mary Daly and Richmond Fed’s Tom Barkin are scheduled to speak at a virtual event Thursday. The key U.S. jobs report for November is due out Friday, along with reports on factory orders and durable goods.

Fears about the spread of the new omicron variant of the coronavirus continued to influence investors, keeping a floor under gold prices because of the yellow metal’s traditional role as a hedge against uncertainty.

March silver futures decreased 0.2% Tuesday to settle at $22.82 an ounce on Comex. The front-month contract lost 1.4% in the first two days of the week. Silver fell 4.7% in November after rising 8.6% in October. The metal is down 14% so far this year. Silver prices are tied to industrial demand. The March contract is currently down $0.060 (-0.26%) to $22.755 and the DG spot price is $22.76.

Spot palladium fell 3.9% Tuesday to $1,747.00 an ounce and tumbled 1.6% so far this week. It plummeted 13% in November after rallying 4.3% in October. It’s down 29% so far in 2021. The DG spot price is currently up by $13.90 an ounce to $954.70.

Spot platinum decreased 2.6% Tuesday to $946.10 an ounce and fell 1.6% in the first two days of this week. The metal dropped 8.1% last month after rising 6% in October. It’s down 12% so far this year. Currently, the DG spot price is up $34.50 an ounce to $1,760.00.


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