Gold rises as inflation hedge, regaining its hedge status after the $1.9 trillion U.S. stimulus measure became law last week.
Advances in futures were capped by a bounce in U.S. Treasury yields, which have pressured gold in recent weeks along with strength in the dollar. Investors traditionally turn to gold and Treasuries when they’re concerned about inflation, though much of that trade has gone into the other assets this year.
U.S. President Joe Biden signed the stimulus bill Thursday. Friday, the Labor Department reported that the producer price index rose 0.5% in February, adding to a 1.3% jump in wholesale inflation in January, the biggest gain since 2009.
Gold futures rallied 1.3% last week, though the precious metal slipped 0.2% Friday to settle at $1,719.80 an ounce on Comex. The metal touched a nine-month low last week. Gold is down 0.5% so far this month after posting its worst month since 2016 in February. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic. The April contract is currently up over $10 an ounce to $1,730.40 and the DG spot price is $1,731.40.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.3% Friday to 1,052.07 metric tons, Reuters reported. Meanwhile, speculators cut their bullish positions in gold and silver contracts in the week ended March 9, according to the weekly Commitments of Traders report released Friday by the U.S. Commodity Futures Trading Commission.
The U.S. stimulus measure is designed as a shot in the arm to the U.S. economy and labor force, which are still reeling from the coronavirus pandemic. A monetary policy meeting by the U.S. Federal Reserve this week — and Fed Chairman Jerome Powell’s press conference on Wednesday — will will give investors further direction on the economy one year after the coronavirus pandemic began.
The COVID-19 virus has killed more than 2.65 million people worldwide and sickened more than 119.8 million. About 25% of the cases — and 20% of the deaths — are in the U.S. The country has almost 29.4 million cases, more than any other nation.
May silver futures increased 2.5% last week to settle at $25.91 an ounce on Comex, though the metal slipped 1.1% Friday. Silver decreased 1.8% in February, its first retreat in three months. It gained 1.9% in January and 47% in 2020. The May contract is currently up over $0.29 an ounce to $26.210 and the DG spot price is $26.17.
Spot platinum gained 5.9% last week to $1,203.80 an ounce, though it slipped 0.4% Friday. The metal rallied 11% in February amid forecasts for higher demand and tighter supplies. The autocatalyst metal advanced 0.5% in January and 11% in 2020. Currently, the DG spot price is up over $20 to $1,226.50.
Spot palladium increased 1.3% last week to $2,386.50 an ounce after rallying 0.5% Friday. It gained 4.9% in February after plummeting 9% in January and rallying 26% in 2020. DG spot price for palladium is currently up over $10 to $2,400.50.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.