Gold steady ahead of Fed policy decision. Investors await signals from the U.S. central bank’s meeting today about whether it will taper its loose monetary policy and tackle rising inflation.
The yellow metal shrugged off this morning’s U.S. new home construction data. While the number rose slightly in May, up 3.6% to a 1.57 million annual pace, April’s originally reported increase of 1.57 million housing starts was trimmed to 1.52 million. Meanwhile, permits to build new homes fell 3% in May, slipping to an annual rate of 1.68 million from a revised 1.73 million in April. Both sets of data missed economists’ forecast which predicted housing starts to rise at a 1.63 million annual pace, with permits coming in at 1.73 million.
A reaffirmation of plans to keep interest rates low would be bullish for gold, as is the expectation of additional inflation. U.S. consumer prices rose at their fastest pace in 13 years in May, data released last week showed. But the dollar traded near a one-month high, and the strong U.S. currency pressured the precious metal.
August gold futures fell 0.5% Tuesday to settle at $1,856.40 an ounce on Comex, and the yellow metal is down 1.2% so far this week. The front-month contract advanced 7.8% in May, the best month for the precious metal since July. Gold gained 3% in April and dropped in January, February and March. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 2% so far in 2021. The August contract is currently up $3.50 an ounce to $1,859.90 and the DG spot price is $1,858.00.
Fed officials have said in recent weeks that high inflation will likely be temporary and remain below the bank’s target, a likely signal that the bank will stay its policy course to restart the economy after the coronavirus pandemic. The COVID-19 virus has killed about 3.82 million people worldwide and sickened around 176.6 million. The U.S. has had more cases than any other nation, but domestic levels are dropping as vaccination becomes more widespread.
U.S. retail sales dropped more than economists expected in May, as spending pivoted to the services sector as Americans resumed activities that had been prohibited in the pandemic, data released Tuesday by the Commerce Department showed. Meanwhile, industrial production climbed 0.8% in May from April, according to data from the Federal Reserve, as American industry rebounded from the downturn caused by the coronavirus pandemic.
In addition to the Fed policy decision, investors will be closely watching for direction from a summit between the U.S. and Russian presidents, testimony by U.S. Treasury Secretary Janet Yellen before a House panel on Thursday and a Bank of Japan policy decision Friday.
In upcoming economic news, initial jobless claims come out Thursday.
July silver futures dropped 1.2% Tuesday to settle at $27.69 an ounce on Comex. They are down 1.6% in the first two days of the week. Silver gained 8.3% in May in the best monthly performance since December. The metal advanced 5.5% in April and dropped in February and March. It rose 47% in 2020 and is up 4.9% so far this year. The July contract is currently up $0.227 an ounce to $27.920 and the DG spot price is $27.84.
Spot palladium increased 0.2% Tuesday to $2,771.50, though it’s down 0.8% so far this week. It lost 4.1% in May. It’s up 13% so far in 2021. Currently, the DG spot price for palladium is up $38.20 an ounce to $2,810.00.
Spot platinum fell 1.6% Tuesday to $1,154.10 an ounce and is down 0.3% in the first two days of the week. It lost 1.5% in May. The autocatalyst metal is up 7.5% in 2021. The DG spot price is currently down $1.60 an ounce to $1,152.50.
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