Gold sticking near $1,860 an ounce, despite the easing of tensions between Russia and Ukraine on Tuesday. The yellow metal steady after this morning’s U.S. retail sales report showed a solid jump in January as investors await this afternoon’s Fed minutes.
Last month, retail sales increased 3.8%, a solid jump over the street’s 2.1% estimate and much better than December’s 2.5% drop. The surge was led by online sales and furniture shopping, while sporting goods and gasoline sales declined. The jump in sales results from a combination of greater consumer activity and rising inflation.
The precious metal touched an eight-month intraday high in the previous session as weaker bond yields bolstered prices that were already high because of the standoff between the two countries.
Front-month gold futures fell 0.7% Tuesday to settle at $1,856.20 an ounce on Comex. The metal gained 0.8% in the first two days of the week after a big rally Monday. Gold dropped 1.8% in January, its worst month since September. It retreated 3.5% in 2021. The April contract is currently up $5.50 (+0.30%) an ounce to $1,861.70 and the DG spot price is $1,864.10.
Russian President Vladimir Putin said Tuesday that some Russian troops, who had been amassed at the Ukraine border, were withdrawing and that he remained open to further negotiations to resolve the Ukraine crisis. But U.S. President Joe Biden warned that an invasion of Ukraine by Russia is still possible — though he pledged to give diplomacy a chance.
While the news out of Russia and Ukraine pressured gold prices, the precious metal got a boost from a dip in U.S. Treasury yields. That reduces the opportunity cost of holding bullion.
As long as the geopolitical situation remains calm, investors’ attention is likely to return to the speculation over interest rates and inflation. The U.S. Federal Reserve is widely expected to begin a series of interest rate hikes in March as inflation continued to surge. Rate increases are typically bearish for gold because they make the yellow metal less attractive to investors than other assets.
The minutes of the last meeting of Fed policymakers in January will be released this afternoon at 2 EST and closely watched for signals on future plans to address soaring inflation. Last week, the U.S. January inflation report showed the biggest year-on-year jump in about four decades. The consumer price index for January showed a 7.5% annual rise, the highest monthly increase since 1982. The data came out Thursday.
The presidents of the Cleveland and St. Louis Feds are scheduled to speak Thursday, and other central bank officials are set to address the U.S. Monetary Policy Forum Friday.
Front-month silver futures decreased 2.1% Tuesday to $23.39 an ounce on Comex. The May contract is down 0.1% so far this 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 May contract is currently up $0.095 (+0.41%) an ounce to $23.485 and the DG spot price is currently $23.59.
Spot palladium fell 3.9% Tuesday to $2,271.00 an ounce, though it’s up 2.5% in the first two days of the week. Palladium jumped 24% last month after rallying 9.6% in December. It retreated 22% in 2021. Palladium’s main use is in catalytic converters for gasoline-powered vehicles. Currently, the DG spot price has leapt up $35.20 an counce to $2,306.60.
Spot platinum lost 0.4% Tuesday to $1,032.30 an ounce, and it’s up 0.5% 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 up $31.30 an ounce to $1,059.70.
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