Gold Slips as Dollar Strengthens

Gold Slips as Dollar Strengthens

Gold slips from a two-week high early Wednesday as the dollar strengthens from its lowest level in a month.

The yellow metal is sticking above the $1,850 an ounce line, shrugging off this morning’s U.S. economic data. Durable goods orders at U.S. factories, which covers items such as machinery and electronics, rose 0.4% in April, missing economists’ forecast of a 0.7% increase.

Investors were awaiting the release of the minutes of the last meeting of Federal Reserve policymakers Wednesday afternoon for further direction. The minutes are likely to shed some light on how hawkish the central bank will be with future interest-rate increases and how worried policymakers are about the 40-year high in inflation.

August gold futures rose 0.9% Tuesday to settle at $1,871.40 an ounce on Comex. The most-active contract advanced 1.2% in the first two days of the week. Gold retreated 2.2% in April, its worst month since September, and 3.5% in 2021. The August contract is currently down $13.50 (-0.72%) an ounce to $1,857.90 and the DG spot price is $1,853.10.

The strength in the dollar Tuesday made gold less attractive to holders of other currencies since the precious metal is denominated in dollars.

Investors have been increasingly concerned that a series of aggressive interest-rate hikes by the Fed to curb the soaring costs of goods and services will affect economic growth. Gold is a traditional hedge against that type of uncertainty.

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

In other economic news, U.S. GDP and initial jobless claims data are scheduled to come out Thursday, and key inflation reports are due Friday.

In addition to the economy, gold and other commodities have some support from uncertainty around the pandemic and the war in Ukraine — and their effect on supply chains.

Front-month silver futures gained 1.6% Tuesday to settle at $22.06 an ounce on Comex, and the July futures gained 1.8% in the first two days of the week. Silver lost 8.2% in April, its worst monthly performance since September. It fell 12% in 2021. Silver prices are tied to industrial demand. The July contract is currently down $0.193 (-0.87%) an ounce to $21.870 and the DG spot price is $21.92.

Spot palladium increased 1.2% Tuesday to $2,040.00 an ounce, and it’s up 2.5% so far this week. The metal advanced 2.6% in April after declining 8.5% in March. It retreated 22% in 2021. The current DG spot price has slipped $2.90 an ounce to $2,034.50.

Spot platinum fell 0.7% Tuesday to $962.20 an ounce, though it rose 0.3% in the first two days of the week. The metal dropped 4.4% last month after declining 4.2% in March. It lost 9.4% last year. The DG spot price is currently down $6.00 an ounce to $954.70.


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