Gold steadies after slipping to its lowest level in almost two weeks at the beginning of the trading day on a stronger dollar. However, the dollar index and Treasury yields then softened leading to the bullion regaining some ground.
Benchmark 10-year Treasury yields touched the highest level since late 2018 in anticipation of a series of aggressive interest-rate increases by the Federal Reserve to combat soaring inflation. But the escalating conflict in Ukraine kept a floor under prices.
Front-month gold futures fell 1.4% Tuesday to settle at $1,959.00 an ounce on Comex. The June contract decreased 0.8% in the first two days of the week. Gold advanced 2.8% in March after gaining 5.8% in February. It gained 6.9% in the first quarter and retreated 3.5% in 2021. The June contract is currently down $9.20 (-0.47%) an ounce to $1,949.80 and the DG spot price is $1,948.10.
St. Louis Fed President James Bullard said Monday that the central bank needs to impose multiple rate hikes of 50 basis points this year to get to a 3.5% rate before the end of the year. He said the Fed shouldn’t rule out an increase of 75 basis points.
The comments came after a U.S. inflation report last week showed consumer prices jumped by 8.5% in March, the most in 16.5 years, taking it to the fastest pace in more than 40 years. Gold is a traditional hedge against inflation, but rate hikes are considered bearish.
The Fed announced a 25-basis-point rate increase in March, its first in years.
Investors will be closely examining comments from many central bank officials this week for further indications on the direction of monetary policy. San Francisco Fed President Mary Daly, Chicago Fed President Charles Evans, and Atlanta Fed President Raphael Bostic are scheduled to speak Wednesday, and Bullard is set to make remarks again on Thursday. Fed Chairman Jerome Powell and European Central Bank President Christine Lagarde are also scheduled to discuss the global economy Thursday at the spring meeting of the International Monetary Fund/World Bank, which begins Monday.
In other economic news, data on existing home sales and the Fed’s Beige Book come out Wednesday, weekly jobless claims and the March index of U.S. leading economic indicators are scheduled for Thursday, and April manufacturing PMI is due out Friday.
Meanwhile, “another phase” of Russia’s invasion of Ukraine has begun, Foreign Minister Sergei Lavrov said in an Indian TV interview. His comments came hours after Ukrainian President Volodymyr Zelenskyy said Russia had begun an offensive in the eastern part of the country.
Front-month silver futures dropped 2.9% Tuesday to settle at $25.48 an ounce on Comex, and the July futures contract declined 1.2% in the first two days of the week. Silver gained 3.1% in March after surging 8.8% in February. It rose 7.6% in the first quarter after falling 12% in 2021. Silver prices are tied to industrial demand. The May contract is currently down $0.266 (-1.05%) an ounce to $25.125 and the DG spot price is $25.11/p>
Spot palladium fell 1.6% Tuesday to $2,427.50 an ounce, though it increased 1.7% in the first two days of the week. 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 dropped 8.5% in March after gaining 5.3% in February. It gained 20% in the first quarter and retreated 22% in 2021. Currently, the DG spot price is up $30.60 an ounce to $2,451.00
Spot platinum tumbled 2.7% Tuesday to $997.10 an ounce and is down 0.3% so far this week. The metal retreated 4.2% in March after advancing 1.7% in February. It increased 2.9% in the first quarter after dropping 9.4% last year. The DG spot price is currently down $9.50 an once to $987.20.
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