Gold Rises as US Dollar Ebbs

Gold Rises as Dollar Ebbs

Gold rises as the US dollar ebbs early Monday, with the yellow metal rebounding from its fifth weekly loss last week, as the dollar slides from 20-year highs and investors scaled back speculation that the Federal Reserve would boost interest rates by 1 percentage point at central bank policymakers’ meeting next week.

The decline in the dollar made gold a more attractive investment for holders of other currencies, bolstering the yellow metal. But the idea that the Fed would raise interest rates by more than 0.75 percentage point to curtail soaring inflation appears to have died after comments from Fed officials last week.

August gold futures fell 2.2% last week to settle at $1,703.60 an ounce on Comex. The front-month contract slipped 0.1% Friday. Bullion fell 2.2% in June after tumbling 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. The DG spot price is currently up $12.80 an ounce to $1,719.90.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange traded fund, fell 0.3% Friday to 1,014.28 metric tons, Reuters reported. 

Economic reports released Friday, including U.S. retail sales, the Empire state manufacturing index and the University of Michigan consumer sentiment report toned down the idea of a 1 percent U.S. rate hike next week. The speculation began after data last week showed the U.S. consumer price index rose 9.1% in June, beating economists’ expectations.

Consumers expect inflation to ease slightly from previous forecasts, the University of Michigan report indicated. U.S. retail sales rose more than expected in June, and the New York manufacturing index increased.

Gold also still has some support from geopolitical uncertainty over the war in Ukraine and the ongoing pandemic.

Economic reports this week include U.S. weekly initial jobless claims and the index of leading economic indicators for June on Thursday as well as flash PMI on Friday. The European Central Bank is also expected to raise interest rates by 0.25 percentage point at its meeting this week.

September silver futures dropped 3.3% last week to settle at $18.59 an ounce on Comex, though the front-month contract rose 2% Friday. Silver declined 6.2% in June after falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract has currently jumped up $0.216 (+1.16%) an ounce to $18.660 and the DG spot price is $18.98.

Spot palladium tumbled 14% last week to $1,873.00 an ounce after falling 3.8% Friday. It lost 2.9% in June after losing 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price has gained $41.10 an ounce to $1,905.50.

Spot platinum retreated 4.7% last week to $859.10 an ounce, though it rose 0.9% Friday.  It lost 7.2% in June after gaining 2.3% in May and losing 9.4% last year. The DG spot price is currently up $17.90 an ounce to $875.80.


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