Gold Rises on Weak Dollar and Strong Crude

Gold Rises on Weak Dollar and Strong Crude

Gold rises on weak dollar and treasuries as strong crude oil prices lead the way. The yellow metal rebounded from last week’s decline, the first in three weeks.

Futures remained under pressure from anticipated half-percentage-point interest rate hikes by the Federal Reserve this month and next and Friday’s U.S. employment report. But gold has some support from uncertainty over inflation, the war in Ukraine, and the ongoing pandemic. 

August gold futures fell 0.4% last week to settle at $1,850.20 an ounce on Comex. The most-active contract retreated 1.1% Friday, though it touched a one-month high in intraday trading before the jobs report. Gold dropped 3.3% in May, its worst month since September. It retreated 3.5% in 2021. The August contract is currently up $2.60 (+0.14%) an ounce to $1,852.80 and the DG spot price is $1,850.50.

U.S. nonfarm payrolls rose by 390,000 in May, and the unemployment rate held at 3.6%, according to Friday’s report from the Bureau of Labor Statistics. The better-than-expected report belied fears of an economic slowdown amid 40-year highs in inflation. Many economists had forecast the report would show the smallest gain in jobs since April 2021. 

Investors are closely watching economic reports for indicators on the state of the economy and whether it might be entering a slowdown and whether the Federal Reserve will have to tweak its plan of a series of interest rate hikes this year to combat inflation to keep from derailing economic growth. 

Most investors expect the Fed to raise rates another half percentage point at policymakers’ next scheduled meeting in June 15, according to the CME’s FedWatch Tool. The central bank increased benchmark rates by half a percentage point in May, in the second rate hike of 2022 and the largest in 22 years. Rate increases are typically considered bearish for gold. 

U.S. consumer price index data for May will be the next big indicator out on Friday. The Fed’s favorite inflation measure – the personal consumption price index — slowed to 6.3% in April from a 40-year high of 6.6% in March, data released at the end of May showed. It was the first decline in the personal consumption index in a year and a half. 

Gold, which had gotten some support from recent Chinese COVID-19-related lockdowns, came under some pressure after China reopened further. Equities rebounded in Asia.

Front-month silver futures fell 0.9% last week to settle at $21.91 an ounce on Comex after the July futures decreased 1.7% Friday. Silver dropped 6.1% in May after losing 8.2% in April. It retreated 12% in 2021. Silver prices are tied to industrial demand. The July contract is up $0.372 (+1.70%) and the DG spot price is $22.29.

Spot palladium dropped 3.9% last week to $2,008.50 an ounce and fell 2.8% Friday. The metal lost 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. The current DG spot price is up $6.10 an ounce to $2,022.00.

Spot platinum jumped 5.9% last week to $1,018.30 an ounce, though it retreated 1.5% Friday. It gained 2.3% last month and lost 9.4% last year. The DG spot price is currently up $14.40 an ounce to $1,034.90.


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