Gold Slips as Recession Worries Ease

Gold Slips as Recession Worries Ease

Gold slips as recession worries ease Wednesday upon hopes that Europe will soon start receiving Russian gas supplies once again.

Speculation has grown that the European Central Bank may increase interest rates by 50 basis points on Thursday, more than previously expected, to combat soaring inflation. The ECB’s policy meeting comes less than a week before Federal Reserve policymakers are expected to boost rates by another 75 basis points. A Bank of Japan policy decision is also due Thursday.

December gold futures slipped by 10 cents Tuesday to $1,728.10 an ounce on Comex. The front-month contract, which rolled to December from August this week, was up 1.4% in the first two days of the week. Bullion fell 2.2% in June after tumbling 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. The December contract is slightly up currently by $0.90 (+0.05%) an ounce to $1,729.00 and the DG spot price is $1,710.90.

Gold has fallen for the past five weeks as the dollar surged to 20-year highs in anticipation of the Fed’s rate increase. But the yellow metal has rebounded slightly this week after its decline made it more attractive to bargain hunters seeking a hedge against fears of an economic recession and uncertainty over the pandemic and the war in Ukraine.

Investors are anticipating reports on U.S. weekly initial jobless claims and the index of leading economic indicators for June on Thursday as well as flash PMI on Friday for further direction. 

The dip in the dollar – which took the euro to two-week highs – also fueled a rally in equity futures. Stocks have been depressed by fears of a recession triggered by the interest-rate increases. Recession speculation grew earlier this month after data showed the U.S. consumer price index rose 9.1% in June, beating economists’ expectations.

September silver futures dropped 0.7% Tuesday to settle at $18.71 an ounce on Comex, though the front-month contract rose 0.6% in the first two days of the week. Silver declined 6.2% in June after falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is currently up $0.242 (+1.29%) an ounce to $18.955 and the DG spot price is $19.12.

Spot palladium rose 0.2% Tuesday to $1,899.50 an ounce and is up 1.4% this week. It lost 2.9% in June after losing 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price has tipped up $2.30 an ounce to $1,891.50.

Spot platinum increased 20 cents Tuesday to $883.20 an ounce, and it’s up 2.8% so far this week.  It lost 7.2% in June after gaining 2.3% in May and losing 9.4% last year. The DG spot price is currently down by $5.50 an ounce to $876.40.


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