Gold rises as Treasurys dip to a one-week low. The yellow metal gathered power on negative news about the pandemic, despite the U.S. dollar index hitting a four-month high.
U.S. Federal Reserve Chairman Jerome Powell, in joint testimony before Congress on Tuesday with Treasury Secretary Janet Yellen, reassured lawmakers that the central bank wouldn’t let inflation spiral out of control. The remarks pressured bond yields and supported gold, which has come under pressure in recent weeks as Treasurys have soared.
Meanwhile, a third wave of COVID-19 infections has swept through Europe, triggering new lockdowns and a rollback of previously planned easing measures as variants are becoming more widespread.
Front-month gold futures fell 0.7% Tuesday to settle at $1,727.50 an ounce on Comex. The June contract decreased 0.9% in the first two days of the week. Gold is down $1.30 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. Currently, the May contract is up $3.80 an ounce to $1,730.40 and the DG spot price is $1,732.00.
Gold, Treasurys and the dollar are all traditional hedges against inflation, which is anticipated from stimulus measures designed to support an economy still reeling from the coronavirus pandemic. But most of the recent trade has gone to Treasurys and the dollar. Gold rose Wednesday despite strength in the dollar.
In other economic news, investors will be watching for the release of the weekly initial jobless claims on Thursday and core inflation for February on Friday.
Powell and Yellen signaled to lawmakers Tuesday that the economy has a long way to go to recover from the pandemic. While the economy is expected to boom this year, at least 9.5 million people are still out of work.
The COVID-19 virus has killed more than 2.73 million people worldwide and sickened more than 124.1 million. About 24% of the cases — and 20% of the deaths — are in the U.S. The country has more than 29.9 million cases, more than any other nation. The variant first found in the U.K. has become dominant in many European countries, and its rapid spread has driven Germany and some other countries to pause lockdown-easing measures.
May silver futures decreased 2.1% Tuesday to settle at $25.23 an ounce on Comex and fell 4.2% in the first two days of the week. Silver is down 4.6% so far this month after decreasing 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 $0.003 an ounce to $25.230 and the DG spot price is $25.24.
Spot platinum retreated 1.4% Tuesday to $1,176.80 an ounce and is down 2.5% so far this week. The metal has lost 2.5% in March after rallying 11% in February amid forecasts for higher demand and tighter supplies. The autocatalyst metal rose 0.5% in January and 11% in 2020. Currently, the DG spot price is slightly up, $0.40 an ounce, to $1,179.20.
Spot palladium slipped 0.3% Tuesday to $2,626.00 an ounce and is down 1.5% this week. It has advanced 12% in March. It gained 4.9% in February, plummeted 9% in January and rallied 26% in 2020. DG spot palladium is currently up over $8.00 an ounce to $2,651.00.
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