Gold was steady Wednesday morning ahead of Fed and after this morning’s disappointing U.S. retail sales numbers. The yellow metal hit a two-week high in the previous session as investors awaited a Federal Reserve monetary policy decision.
It appears U.S. consumer spending slowed in August, the same month that saw extended unemployment benefits cut for millions of Americans. The Commerce Department reports core retail sales fell 0.1% last month after a downwardly revised 0.9% increase in July.
The dollar strengthened ahead of the Fed meeting — the first since the central bank adopted a more accommodative approach to inflation and pledged to keep interest rates low for a while. A stronger dollar is typically bearish for gold, but the yellow metal is a traditional hedge against inflation.
Gold futures rose $2.50 Tuesday to settle at $1,966.20 an ounce on Comex. The December contract increased 0.9% in the first two days of the week. Gold is still up more than $400 — or 29% — so far this year as investors have flocked to gold because of uncertainty from the coronavirus pandemic and the economy. The December contract for gold is currently $1,982.70 an ounce and the DG spot price is $1,973.20.
Investors will use the outcome of the Federal Open Market Committee meeting and statements from the subsequent news conference by Fed Chairman Jerome Powell to determine how far the central bank will go to support the economic recovery. The Bank of Japan and Bank of England will announce policy decisions Thursday.
The virus known as COVID-19 has killed more than 933,000 people worldwide and sickened 29.5 million and decimated global economic growth. About 22% of the cases — and 21% of the deaths — are in the U.S. The country has 6.6 million cases, more than any other nation. The economic impact of the coronavirus pandemic and associated lockdowns has cost millions of Americans their jobs.
Adding to uncertainty was speculation about the outcome of the U.S. presidential election in November and whether Democrats and Republicans will be able to reach an accord on a new federal stimulus measure.
U.S. industrial production grew less than economists anticipated in August — and the gain was much smaller than in the prior two months, according to data released Tuesday from the Federal Reserve. Meanwhile, Chinese industrial production and retail sales data for August surprised to the upside.
In upcoming economic news, U.S. retail sales data are due Wednesday, with initial jobless claims and housing starts on Thursday. Friday is what’s known as quadruple witching in U.S. markets — a typically volatile day when the quarterly expiration of futures and options on indexes and stocks coincides.
Silver futures rose 0.4% Tuesday to settle at $27.46 an ounce on Comex, and the December contract increased 2.3% in the first two days of the week. The most active contract is down 4% this month after gaining 18% in August and soaring 30% in July. Currently, the December contract for silver is $27.655 an ounce and the DG spot price is $27.44.
Spot palladium increased 4% Tuesday to $2,423.00 an ounce and is up 3.8% so far this week. Spot platinum advanced 2% Tuesday to $979.90 an ounce, and it has rallied 4.7% over the past two days. The DG spot price for platinum is currently $981.10 an ounce and $2,423.90 an ounce for palladium.
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