Gold Rises On Dollar, Treasury Yields

Gold Rises On Dollar, Treasury Yields

Gold rises early Wednesday as the U.S. dollar and Treasury yields weakened, though the precious metal came under pressure because of peace talks between Russia and Ukraine. The yellow metal continued to rise after this morning’s placid job numbers.

U.S. companies added jobs in March at a steady pace per payroll processing firm ADP. The number show strong hiring trends, instead of a tightening labor market. Private payrolls grew by 455,000 jobs for the month which is just over the Dow Jones estimate of 450,000. Jobs are a key indicator that the Fed is watching to determine is they will follow the robust interest rate increase schedule that they are pondering for 2022.

The U.S. dollar index slid to the lowest level in more than a week in the last session. That means holders of other currencies don’t have to pay as much to invest in gold, making the metal more attractive. U.S. benchmark Treasury yields also dropped from near three-year highs, making gold a more attractive alternate investment.

Gold also advanced after rallying in the first two days of this week.

Front-month gold futures fell 1.4% Tuesday to settle at $1,918.00 an ounce on Comex, and the June contract dropped 2.1% in the first two days of the week. Gold is up 0.9% in March after gaining 5.8% last month. It retreated 3.5% in 2021.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% Tuesday to 1,091.44 metric tons, Reuters reported. Gold has gotten a boost in the past month as a hedge against geopolitical uncertainty resulting from the Russia-Ukraine war.

Russia pledged to reduce its attacks on Ukraine after peace talks this week during talks in Turkey, but many Western allies were skeptical. Russia said it would scale back its military activity around the capital of Kyiv and in northern Ukraine.

Continued uncertainty over the course of the pandemic also helped support the yellow metal. China began a lockdown of Shanghai, its financial hub, this week as part of a zero-COVID policy.

In upcoming economic news, investors were awaiting key inflation data on Thursday and the closely watched U.S. jobs report for March on Friday. Manufacturing indexes from the U.S. and other major economies are also due out on Friday.

Investors will also seek direction from scheduled comments by the Richmond Federal Reserve’s Tom Barkin and Kansas City Fed’s Esther George on Wednesday and the Chicago Fed’s Charles Evans on Friday.

Front-month silver futures decreased 1.8% Tuesday to settle at $24.74 an ounce on Comex, and the May futures contract dropped 3.4% in the first two days of the week. Silver is up 1.5% in March after surging 8.8% in February. It fell 12% in 2021. Silver prices are tied to industrial demand. The May contract is currently up $0.449 (+1.82) an ounce to $25.185 and the DG spot price is $25.04.

Spot palladium retreated 5% Tuesday to $2,160.00 an ounce and fell 10% in the first two days of the week. It touched a record $3,440.76 earlier this month. Russia produces about 40% of the world’s palladium, and Russia’s Nornickel is the world’s largest supplier of palladium. The metal is down 14% in March after gaining 5.3% in February. It retreated 22% in 2021. Currently, the DG spot price is up $129.30 an ounce to $2,272.00.

Spot platinum decreased 1.1% Tuesday to $985.70 an ounce and lost 2.3% so far this week. The metal is down 5.7% in March after advancing 1.7% in February. It lost 9.4% last year. The DG spot price is currently up $21.00 an ounce to $1,003.80.


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