Gold Slips to Three-Week Low on Strong Dollar

Gold Slips to Three-Week Low on Strong Dollar

Gold slips to a three-week low early Friday on strong dollar, headed for the first weekly decline in a month as the dollar hits a one-month peak.

The U.S. currency rose on anticipation of a continued aggressive monetary policy stance by the Federal Reserve to combat inflation.

The minutes of last month’s meeting of the policymaking Federal Open Market Committee, released Wednesday, indicated that members are committed to a series of interest rate hikes until inflation comes down substantially. The Fed raised rates by 75 basis points each in June and July, though a few positive economic reports since then had triggered some speculation that the Fed might impose a smaller increase in September.

Fed officials provided differing signals in remarks Thursday. St. Louis Fed President James Bullard backed another 75-basis-point move, while Kansas City Fed President Esther George, who supported a smaller rate hike in July, seemed to indicate that the size of the next increase was up for debate. Both are voting members of the FOMC this year.

Front-month gold futures fell 0.3% Thursday to settle at $1,771.20 an ounce on Comex. The December contract decreased 2.4% in the first four days of the week. Bullion dropped 1.4% in July after falling 2.2% in June and 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. Currently, the December contract is down $0.50 (-0.03%) an ounce to $1,770.70 and the DG spot price is $1759.20.

San Francisco Fed President Mary Daly told CNN Thursday that she’d be open to either a 50 or a 75 basis point hike next month, and Minneapolis Fed President Neel Kashkari said the need to reduce inflation remained urgent. Neither are current voting members of the FOMC.

Investors are now betting there’s a 59.5% chance of a 50-basis-point rate hike in September, with just 40.5% projecting a 75-basis-point increase, according the CME FedWatch Tool. A month ago, 63.1% of investors anticipated a hike of 75-basis points or more.

Fed Governor Michelle Bowman said Wednesday that the labor market remains tight, with the supply of workers limited in some cases by child care and elder care concerns. But the labor market shows little sign of softening.

Weekly initial jobless claims declined by 2,000 to 250,000  last week, below the Dow Jones estimate of 260,000, according to data released Thursday. The U.S. index of leading economic indicators fell for a fifth straight month in July, suggesting the risk of a recession is rising, according to the Conference Board.

Front-month silver futures fell 1.4% Thursday to settle at $19.57 an ounce on Comex. The December contract tumbled 6.1% in the first four days of the week. Silver slipped 0.8% in July after declining 6.2% in June and falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is down $0.304 (-1.56%) an ounce to $19.160 and the DG spot price is $19.31.

Spot palladium gained 0.8% Thursday to $2,180.50 an ounce, though it’s down 3% so far this week. Palladium rose 9.9% in July after losing 2.9% in June and 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. The current DG spot price is down $22.40 an ounce to $2,152.00.

Spot platinum declined 1.3% Thursday to $918.40 an ounce, though it fell 5.2% in the first four days of the week. Platinum retreated 0.3% in July after losing 7.2% in June. It dropped 9.4% last year. The DG spot price is currently down $12.20 an ounce to $908.70.

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