Gold steady ahead of inflation report, inching toward a two-week high early Wednesday as investors awaited Thursday’s U.S. inflation data for January and bond yields dip.
The yellow metal is a hedge against inflation so typically gets a boost from the high cost of goods and services. The U.S. posted the fastest year-on-year gain since September 1983 in December. But the high numbers are spurring the Federal Reserve to speed up monetary tightening efforts, which is bearish for the precious metal.
Front-month gold futures rose 0.3% Tuesday to settle at $1,827.90 an ounce on Comex, the highest settlement for a front-month contract since Jan. 26. The metal is up 2.3% so far this week. Gold dropped 1.8% in January, its worst month since September. It retreated 3.5% in 2021. Currently, the April contract is slightly off – $0.40 (-0.02%) an ounce – to $1,827.50 and the DG spot price is $1,828.30.
Economists are forecasting a 7.3% annual rise in inflation in the January report following strong jobs data last week. Nonfarm payrolls rose 467,000 in January, more than triple the consensus estimate by analysts of 150,000.
Together, the economic data is likely to pressure the Federal Reserve to move forward with multiple interest rate increases this year. Higher rates make gold less attractive as an alternate investment. The CME FedWatch Tool shows that 100% of traders now expect a rate increase at the March meeting, compared with 75.9% a month ago.
But gold prices still have a floor from uncertainty over both the spread of the coronavirus and the heightening tensions between Russia and Ukraine.
March silver futures increased 0.5% Tuesday to $23.20 an ounce on Comex. The front-month contract advanced 4% in the first two days of the week. Silver dropped 4.1% in January after gaining 2.4% in December. It fell 12% in 2021. Silver prices are tied to industrial demand. The March contract is currently down $0.045 (-0.19%) an ounce to $23.155 and the DG spot price is $23.22.
Spot palladium rose $1 Tuesday to $2,279.00 an ounce. It’s down 4.8% so far this week. Palladium jumped 24% last month after rallying 9.6% in December. It fell 22% in 2021. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. The metal continues its rise, up $16.80 an ounce, currently, to $2,300.00.
Spot platinum gained 1.5% Tuesday to $1,042.50 an ounce, and it’s up 2.8% so far this week. The metal rose 5.7% in January after gaining 2.9% in December. It lost 9.4% last year. The DG spot price is currently down $5.80 an ounce to $1,038.60.
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