Gold Slips 1% Wednesday

Gold Slips 1% Wednesday

Gold slips 1% on Wednesday, after nearing a two-month high overnight, as investors exercised some profit taking and the dollar stopped its slide. Meanwhile the markets are keeping an eye on the outcome of Georgia’s U.S. Senate run-off and this afternoon’s release of December’s Fed minutes.

The U.S. currency, which was already trading near two-year lows, tumbled Tuesday after oil — which is priced in dollars — increased on news of a surprise supply cut. A weaker dollar is typically bullish for gold as an alternative investment and a hedge against expected inflation.

Front-month gold futures rose 0.4% Tuesday to settle at $1,954.40 an ounce on Comex. The February contract has advanced 3.1% so far this week, adding to December’s 6.4% rally. The yellow metal climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the coronavirus pandemic. Currently, the February contract is down $20 an ounce to $1,934.30 and the DG spot price is $1,934.90.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.1% Tuesday to 1,186.78 metric tons, Reuters reported.

In the U.S., the pending results of two hard-fought Senate runoff races in Georgia on Tuesday will determine whether Republicans maintain control of the U.S. Senate or if Democrats will run the chamber. Also Wednesday, Congress is expected to officially announce the results of the November presidential election, despite defeated President Donald Trump’s continued efforts to overturn them.

Who controls the Senate will likely determine the future of additional stimulus measures considered bullish for gold and whether President-elect Joe Biden will be able to implement his agenda.

The minutes of the U.S. Federal Reserve’s Dec. 15-16 policy meeting are due at 2 pm EST. The minutes are likely to detail the Fed’s decision to leave its monthly bond purchases unchanged — dismaying analysts who thought the central bank should have expanded the program to better support the economy through the pandemic — and how the Fed is factoring the promise of a coronavirus vaccine into its plans. Investors will focus on any insights into what it would take for central bankers to shift monetary policy in coming months if widespread immunization triggers a strong economic rebound.

Trump plans to address supporters Wednesday in Washington, even as Congress considers the election results. About a dozen Republican senators and many members of the House of Representatives have said they plan to object to the results from some states, though they aren’t expected to succeed.

Continued uncertainty about the COVID-19 pandemic and the global economy are also supporting precious metals, even as new vaccines roll out. The virus has killed almost 1.87 million people worldwide and sickened about 86.4 million. About 24% of the cases — and 19% of the deaths — are in the U.S. The country has more than 21 million cases, more than any other nation.

November factory orders and the minutes of the last FOMC meeting are due Wednesday, with weekly initial jobless claims on Thursday. Key unemployment data for December is due Friday.

Front-month silver futures gained 1% Tuesday to settle at $27.64 an ounce on Comex, and the March contract advanced 4.7% in the first two days of the week. Silver surged 17% in December and 47% in 2020. The March contract is currently down $0.37 an ounce to $27.27 and the DG spot price is $27.33.

Spot palladium increased 4% Tuesday to $2,486.50 an ounce and gained 1.5% in the first two days of this week. It rallied 2% in December and 26% in 2020. The DG spot price is currently down over $55 an ounce to $2,436.50.

Spot platinum rose 4.3% Tuesday to $1,118.00 an ounce and advanced 4.2% in the first two days of the week. The metal added 11% in December and 11% in 2020. Currently, the DG spot price for platinum is off just over $10 an ounce to $1,104.30


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