Gold Steady Ahead of Fed Comments

Gold Steady Ahead of Fed Comments

Gold steady ahead of Fed comments this afternoon on their monetary policy decision. The yellow metal tumbled Tuesday ahead of the announcement, with some market watchers speculating that investors were taking positions ahead of a possible interest rate increase by the Fed, which would be bearish for gold.

The Fed’s statement and Chairman Jerome Powell’s comments after the meeting this afternoon at 2 pm EST will be closely parsed for indications about how fast the central bank will taper stimulus measures, how it plans to tackle soaring inflation and the timeline of an interest rate decision.

Gold shrugged off disappointing U.S. retail sales data this morning. The Commerce Department reporting a weak 0.3% bump in November, missing the forecasted jump of 0.8%.

February gold futures fell 0.9% Tuesday to settle at $1,772.30 an ounce on Comex and dropped 0.7% in the first two days of the week. The precious metal has been rangebound in recent weeks, closing between $1,762.70 and $1,788.30 since Nov. 23. Gold decreased 0.4% in November after advancing 1.5% in October. The yellow metal is down 6.5% so far in 2021. Currently, the February contract is down $7.20 (-0.41%) an ounce to $1,765.10 and the DG spot price is $1,767.20.

March silver futures decreased 1.8% Tuesday to settle at $21.92 an ounce on Comex, and the front-month contract dropped 1.2% in the first two days of the week. Silver fell 4.7% in November after rising 8.6% in October. The metal is down 17% so far this year. Silver prices are tied to industrial demand. The March contract is down currently, off $0.184 (-0.84%) an ounce to $21.740 and the DG spot price is $21.70.

The U.S. consumer price index, a closely watched barometer on inflation, surged to a 39-year high of 6.8% last month, according to a report released last week, further pressuring the Fed and other central banks to take steps to rein in runaway prices.

Gold is a traditional hedge against inflation, along with the dollar and Treasury yields, and all three markets closely track economic indicators and the Fed’s likely actions, along with those of other central banks. Policymakers from the European Central Bank and the Bank of England are scheduled to announce policy decisions Thursday, while the Bank of Japan is set to follow Friday.

Investors will also be watching Wednesday for the release of November retail sales data, the NAHB home builders’ index and business inventories for a snapshot on the state of the economy. U.S. weekly initial jobless claims — which dropped to their lowest level in more than half a century in the last report — come out Thursday.

Markets also continued to grapple with what the omicron variant of the coronavirus will mean for the global economic recovery.

Meanwhile, palladium plummeted amid the global shortage of semiconductor chips used in automobile production. The metal’s main use is in catalytic converters for gasoline-powered vehicles. Spot palladium retreated 3.1% Tuesday to $1,641.50 an ounce and plunged 7.1% in the first two days of this week. It plummeted 13% in November after rallying 4.3% in October. It’s down 33% so far in 2021. Currently, the DG spot price is down $77.70 an ounce to $1,560.00.

Spot platinum fell 1% Tuesday to $925.50 an ounce and retreated 2.3% in the first two days of the week. The metal dropped 8.1% last month after rising 6% in October. It’s down 14% so far this year. The DG spot price is currently down $14.60 an ounce to $911.30.


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