Gold slips from near two-month high Wednesday ahead of a Federal Reserve announcement expected to indicate an escalated pace of monetary policy tightening, which would be bearish for the yellow metal.
But gold gained steam in the previous sessions as heightening tensions between Russia and Ukraine and Western powers made the precious metal more attractive as a hedge against uncertainty.
Front-month gold futures rallied 0.6% Tuesday to settle at $1,855.00 an ounce on Comex, the highest closing price since Nov. 18. The April contract rallied 1.1% in the first two days of the week. Gold advanced 2.9% in December — its best month since May — and climbed 4.1% in the fourth quarter. But it dropped 3.5% in 2021. The DG spot price is currently down $18.10 an ounce to $1,835.50.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose about 0.5% Tuesday to 1,013.10 metric tons, Reuters reported.
The Federal Open Market Committee isn’t expected to boost rates at its first meeting of 2022, which ends Wednesday — that’s widely anticipated to happen in March — but it is forecast to confirm the central bank’s plans for interest rate hikes this year and how it will deal with inflation. The CME FedWatch Tool shows that 93.4% of traders expect a rate increase at the March meeting, up from 57.7% a month ago.
In addition to the Fed statement and Chairman Jerome Powell’s press conference Wednesday afternoon at 2 pm EST investors are awaiting data on new home sales.
Gold also got a boost from fears of an imminent invasion of Ukraine by Russia and the spread of the omicron variant of the coronavirus. U.S. President Joe Biden said Tuesday that there would be “enormous consequences” for the world if Russia invades. He joined a chorus of Western leaders in issuing warnings. Moscow has deployed around 100,000 soldiers near the border.
March silver futures rallied 0.4% Tuesday to $23.90 an ounce on Comex, though the front-month contract dropped 1.7% in the first two days of the week. Silver gained 2.4% in December and 5.9% in the fourth quarter, though it dropped 12% in 2021. Silver prices are tied to industrial demand. The March contract is down $0.196 (-0.82%) an ounce to $23.700 and the DG spot price is $23.74.
Spot palladium rose 2.4% Tuesday to $2,214.00 an ounce and advanced 4.6% in the first two days of the week. Palladium rallied 9.6% in December, but it fell 0.4% in the fourth quarter and 22% in 2021. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. This morning, palladium has hit its highest point since September. Currently, the DG spot price is up $119.10 an ounce to $2,331.00.
Spot platinum increased 0.7% Tuesday to $1,036.00 an ounce, though it slid 0.6% in the first two days of the week. The metal gained 2.9% in December and 0.2% in the fourth quarter. It lost 9.4% last year. The DG spot price is up $22.60 an ounce to $1,056.20.
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