Gold Slips as Dollar Rallies

Gold Slips as Dollar Rallies

Gold slips this morning as dollar rallies, but the yellow metal is still on track for its eighth straight quarterly gain. The dollar rose following the first presidential debate between Donald Trump and Joe Biden.

A chaotic first U.S. presidential debate turned investors wary and sent them to the refuge of the dollar, setting the dollar index up for its best month since July 2019. Gold’s decline was tempered by bullish economic data out of China.

This morning’s release of the annualized second-quarter GDP, that showed a decline of 31.4%, slightly beating the forecast of 31.7%, gave gold a momentary boost back above $1,900.

Gold futures rose 1.1% Tuesday to settle at $1,903.20 an ounce on Comex. The December contract gained 2% in the first two days of the week. Gold is still up almost $400 — or 25% — so far this year as investors have flocked to gold because of uncertainty from the coronavirus pandemic and the economy. The December contract is at $1,890.8 an ounce, while the DG spot price is $1,888.00 an ounce.

An acrimonious first debate between the two U.S. presidential candidates on Tuesday evening caused the dollar to rally and gold and equities to drop early Wednesday. But fears that the colder winter months will bring a new wave of coronavirus cases continue to provide a floor for precious metals prices as a hedge against uncertainty.

The virus known as COVID-19 has killed more than 1 million people worldwide and sickened nearly 33.6 million. About 21% of the cases — and 20% of the deaths — are in the U.S. The country has 7.19 million cases, more than any other nation.

China on Wednesday reported September manufacturing activity expanded at a faster rate than economists had expected. The official Purchasing Managers Index came in at 51.5, compared with 51.0 in August, according to data from the National Bureau of Statistics. Figures over 50 indicate expansion. Analysts surveyed by Reuters had forecast a figure of 51.2.

The U.S. and other major economies will release key first-of-the-month manufacturing reports for September on Thursday. And, at the end of the week, the U.S. will release the latest jobless figures — initial jobless claims for last week on Thursday, followed by the key monthly unemployment rate for September on Friday. The pandemic has cost millions of Americans their jobs.

Investors are also watching Washington lawmakers for progress on a stimulus measure to prop up the economy. Stimulus efforts are typically bullish for gold.

Silver futures rose 3.6% Tuesday to settle at $24.45 an ounce on Comex. The December contract rallied 5.9% in the first two days of the week. But the most active contract is down 15% this month after gaining 18% in August and soaring 30% in July. The December contract is at $23.870 an ounce, while the DG spot price is down $.50 to $23.86.

Spot palladium increased 2.3% Tuesday to $2,330.60 an ounce. It’s up 4.4% so far this week and 2.1% so far in September. Spot platinum gained 0.6% Tuesday to $899.10 an ounce. It’s up 5.2% so far this week and down 4.3% in September. Currently, the DG spot price for platinum is down by a little over $4 to $894.00 an ounce, while palladium is up over $14 to $2,350.30.


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