Gold slips on stronger dollar but sticks above $1860 an ounce. The yellow metal fell early Monday as the dollar strengthened toward a 20-year high on high inflation and the prospect of an economic slowdown.
The rising value of the U.S. currency pressured dollar-denominated gold because it makes the precious metal more expensive for holders of other currencies. Treasury yields approached levels last seen in 2018. Like the dollar and Treasury yields, gold is a traditional hedge against inflation, which kept a floor under prices along with geopolitical uncertainty.
Front-month gold futures fell 1.5% last week to settle at $1,882.80 an ounce on Comex, though the June contract rose 0.4% Friday. Gold decreased 2.2% in April, its worst month since September. It retreated 3.5% in 2021. Currently, the June contract is off $13.80 (-0.73%) an ounce to $1,869.00 and the DG spot price $1,866.10.
Uncertainty on the economy, monetary policy, inflation, the war in Ukraine, and the ongoing coronavirus pandemic kept global markets volatile.
The Federal Reserve raised interest rates by half a percentage point last week, in the largest increase in more than 22 years. The Fed’s rate hike Wednesday was the second this year — and one of many more anticipated — as the central bank strives to rein in 40-year highs in inflation. Many investors are now questioning whether the Fed waited to long to try to rein in inflation.
Investors will be closely watching for the release of the April consumer price index and core CPI data on Wednesday for further direction.
The vast majority of investors expect the Fed to raise interest rates another half percentage point to a range of 1.5% to 1.75% at policymakers’ next scheduled meeting in June, according to the CME’s FedWatch Tool.
The key U.S. April employment report, released Friday by the Bureau of Labor Statistics, showed that employers added 428,000 jobs in April, the same level in March, and the unemployment rate held steady at 3.6%. The figures put both the unemployment rate and jobs creation close to pre-pandemic levels. But that the pace of growth held from the prior month indicates that the job market may be returning to normal, which is good for economic stability.
Investors are also closely watching the Russia-Ukraine war Monday, as Russian President Vladimir Putin was expected to lead annual celebrations marking the Allied — including the Soviet — victory over Nazi Germany in World War II and may make comments regarding the current conflict.
Front-month silver futures tumbled 3.1% last week to settle at $22.37 an ounce on Comex, as the July futures contract retreated 0.3% Friday. 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 $0.302 (-1.35%) an ounce to $22.065 and the DG spot price is $22.01.
Spot palladium decreased 12% last week to $2,076.00 an ounce after dropping 6.6% Friday. Palladium touched a record $3,440.76 in March. Russia produces about 40% of the world’s palladium, and Russia’s Nornickel is the world’s largest supplier of palladium. The metal advanced 2.6% in April after declining 8.5% in March. It retreated 22% in 2021. Currently, the DG spot price is off $10.20 an ounce to $2,058.00.
Spot platinum retreated 1.5% last week to $972.20 an ounce after dropping 2% Friday. The metal retreated 4.4% last month after dropping 4.2% in March. It lost 9.4% last year. The DG spot price is currently down $26.00 an ounce to $953.00.
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