Gold slumps as inflation jumps, giving the U.S. dollar a boost. The yellow metal started the trading day slipping from the $1,800 mark when the dollar started flexing its muscles. However, gold is still striving for a monthly gain, after the U.S. reported tepid economic growth for the third quarter on Thursday. Silver headed for its worst week since mid-September.
In September, annual inflation rose at its fastest pace in more than 3 decades, the Commerce Department reported Friday. Gold dropped over $20 an ounce on the news. Headline inflation rose at a 4.4% annual rate in September, while core inflation, the Fed’s preferred gauge, increased 3.6% for the past 12 months (also the fastest pace in 30 years). Personal income declined 1% in September, more than the forecast 0.4% drop, while consumer spending jumped 0.6%, in line with Wall Street estimates.
Investors are awaiting next week’s meeting of Federal Reserve policy makers to pull gold out of a tight range near $1,800 an ounce. The Fed is widely expected to begin scaling back pandemic stimulus measures in response to inflationary pressures.
December gold futures rose 0.2% Thursday to settle at $1,802.60 an ounce on Comex, and the front-month contract advanced 0.4% in the first four days of the week. Gold is up 2.6% so far this month after retreating 3.4% in September. The yellow metal is down 4.9% so far in 2021. Analysts in a Reuters poll cut their price forecasts for gold for this year and next, the agency reported. Currently, the December contract is down $25.40 (-1.41%) an ounce to $1,777.20 and the DG spot price is $1,773.40.
December silver futures decreased 0.3% Thursday to settle at $24.12 an ounce on Comex. The front-month contract fell 1.4% in the first four days of the week. Silver has increased 9.4% this month after dropping 8.2% in September, its fourth consecutive monthly decline. The metal is down 8.8% so far this year. Silver prices are tied to industrial demand. The December contract is currently down $0.260 (-1.08%) an ounce to $23.860 and the DG spot price is $23.81.
In economic news, U.S. GDP, adjusted for inflation, grew 0.5% in the three months ended in September, according to data from the Commerce Department. That compares with 1.6% in the second quarter.
The dollar and Treasury yields weakened on the news — and after U.S. weekly initial jobless claims fell to a new pandemic low in data released Thursday. The weakness in the other assets put a floor under gold prices.
Investors will be closely watching for next week’s moves by Fed policy makers and any signals about the state of the global economy and the pandemic from G-20 finance and health ministers meeting jointly Friday ahead of a summit of the countries’ leaders over the weekend.
On Thursday, the European Central Bank said it was sticking with interest negative rates despite surging inflation. The Bank of Japan also kept its monetary policy unchanged, though it cut its outlook for growth and inflation.
Spot palladium rose 1.9% Thursday to $2,012.00 an ounce, but it’s down 1.6% so far this week. It’s down 4.7% so far this month after declining 23% in September. It’s down 18% so far in 2021. Currently, the DG spot price is down $24.40 an ounce to $1,987.00.
Spot platinum gained 0.6% Thursday to $1,029.60 an ounce, though it’s down 2.2% so far this week. The metal is up 6% so far in October after losing 5.3% last month. It’s down 4.1% so far this year. The DG spot price is down $16.80 an ounce to $1,014.10.
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