Gold rises as dollar weakens, with the yellow metal climbing over 1% to a one-week high early Monday as the dollar dropped, increasing the attraction of gold to holders of other currencies.
The precious metal posted its first weekly gain in five last week after the dollar posted its first weekly decline in almost two months. The U.S. currency came off two-decade highs, and the S&P 500 slipped into bear market territory last week, increasing gold’s appeal as an alternate investment.
Front-month gold futures rose 2.2% last week to settle at $1,848.40 an ounce on Comex after the most-active contract rolled to August from June. The August contract rose 60 cents Friday. Gold retreated 2.2% in April, its worst month since September, and 3.5% in 2021. Currently, the June contract is up $10.90 (+0.59%) an ounce to $1,853.00.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.7% Friday to 1,063.43 metric tons, according to Reuters.
Gold is also getting a boost from uncertainty around the war in Ukraine and the ongoing pandemic. Beijing reported a record number of new cases during the current COVID-19 outbreak, raising the specter of lockdowns which will continue to impact the global supply chain and support commodity prices.
While the dollar declined, strength in U.S. Treasury yields early Monday kept pressure on gold prices. Gold, the dollar and Treasurys ae traditional hedges against inflation, currently at 40-year highs, and economic uncertainty, which has been increasing in recent months.
St. Louis Federal Reserve President James Bullard said Friday that he doesn’t expect a recession unless there is a “really large shock” to the economy.
Investors have been increasingly concerned that a series of aggressive interest-rate hikes by the Fed to curb the soaring costs of goods and services will affect economic growth. Gold is a traditional hedge against that type of uncertainty.
Most investors expect the Fed to raise rates another half percentage point to a range of 1.5% to 1.75% at policymakers’ next scheduled meeting in June, according to the CME’s FedWatch Tool. It increased benchmark rates by half a percentage point earlier this month, in the second rate hike of 2022 and the largest in 22 years. Rate increases are typically considered bearish for gold.
In upcoming economic news, Atlanta Fed President Raphael Bostic and Kansas City Fed President Esther George are set to speak Monday. European Central Bank Governing Council members Robert Holzmann and Joachim Nagel and Bank of England Governor Andrew Bailey are also set to discuss inflation at an event Monday. Minutes of the last meeting of Fed policymakers are set for release Wednesday, U.S. GDP and initial jobless claims data come out Thursday and key inflation reports are due Friday.
Front-month silver futures gained 3.2% last week to settle at $21.67 an ounce on Comex, though the July futures contract slid 1.2% Friday. Silver lost 8.2% in April, its worst monthly performance since September. It fell 12% in 2021. Silver prices are tied to industrial demand. The July contract is currently up $0.206 (+0.95%) an ounce to $21.880 and the DG spot price is $21.92
Spot palladium increased 1.2% last week to $1,990.00 an ounce, though it fell 2.7% Friday. The metal advanced 2.6% in April after declining 8.5% in March. It retreated 22% in 2021. Currently, the DG spot price has risen $27.30 an ounce to $2,017.00. Spot platinum jumped 1.2% last week to $959.00 an ounce, though it retreated 1.8% Friday. The metal dropped 4.4% last month after declining 4.2% in March. It lost 9.4% last year. The current DG spot price is up $21.40 an ounce to $980.50.
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