Gold Reclaims Overnight Slip

Gold Reclaims Overnight Slip

Gold reclaims overnight slip as the U.S. dollar index softens. Additionally, traders took advantage of Wednesday’s early morning dip, giving the price a boost. Eyes and ears are on Thursday’s meeting of the European Central Bank, which investors are watching for inflation forecasts.

The dollar had advanced to its highest level in weeks in the early Wednesday hours, but yesterday’s halt to testing of a hotly anticipated COVID-19 vaccine added uncertainty to markets, putting a floor under the gold price.

Gold futures rose 0.5% Tuesday to settle at $1,943.20 an ounce on Comex. The December contract decreased 2.1% last week, and U.S. financial markets were closed Monday for the Labor Day holiday. Futures slipped 0.4% in August — even after closing at a high of $2,069.40 on Aug. 6. Currently, the December contract is $1,950.50 and the DG spot price is $1,942.60.

The yellow metal is still up more than $400 — or 28% — so far this year as investors have flocked to gold as a hedge against uncertainty as the coronavirus pandemic has worsened and threatened the economy.

Gold is likely to get a boost from uncertainty surrounding the U.S. presidential election, which is currently less than two months away, Peter Grosskopf, CEO of Sprott, the precious-metals-focused money manager, told Bloomberg. A win by Democratic presidential candidate Joe Biden would likely also boost gold, he said, citing anticipation that the former vice president would be likely to raise taxes and increase spending.

The ECB is expected to hold interest rates steady Thursday, but may warn that downside risks to the economy have worsened as the pandemic settles in. That in turn may be read as an indication that further stimulus measures are likely before the end of the year. Stimulus measures are typically considered bullish for gold.

The virus has killed more than 896,000 people worldwide and sickened 27.5 million. About 23% of the cases — and 21% of the deaths — are in the U.S. The country has 6.33 million cases, more than any other nation.

Federal Reserve policy makers are scheduled to hold their next meeting next week, and it will also be closely watched. The economic impact of the coronavirus pandemic and associated lockdowns has cost millions of Americans their jobs.

In upcoming economic news, investors will be watching for the Labor Department’s weekly initial jobless claims report on Thursday and U.S. CPI data due out on Friday. Consumer prices probably rose for a third month in August, according to economists surveyed by Bloomberg.

Silver futures rose 1% Tuesday to settle at $26.99 an ounce on Comex. The December contract declined 3.9% last week. The most active contract gained 18% in August after soaring 30% in July. At post time, December contract stands at $27.03 while the DG spot price is $26.99.

Spot palladium decreased 2% Tuesday to $2,304.30 an ounce after rising 5.1% last week. It rallied 7.6% last month. Spot platinum advanced 1.3% Tuesday to $916.60 an ounce and decreased 3.7% last week. It increased 3.5% in August. The current DG spot price for platinum is $929.70 and the palladium spot price is $2,298.60.


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