Gold sticking near five-month high, after taking a short-lived $16 an ounce (.7%) dip earlier Friday on some profit-taking and a rise in U.S. bond yields and a strengthening dollar. The bullion is on track for its second weekly gain as escalating inflation made the precious metal more attractive to investors as a way to protect wealth.
The yellow metal still aiming for its best week in six months. Gold is a traditional hedge against inflation, along with the dollar and Treasurys. But gold has largely taken a backseat to the other assets for most of this year, and a strengthening dollar and Treasury yields can be bearish for gold. But that seemingly changed with the release this week of the October U.S. inflation data.
Treasurys extended a selloff early Friday after the bond market was closed Thursday for the Veterans Day holiday.
December gold futures rose 0.8% Thursday to settle at $1,863.90 an ounce on Comex, and the front-month contract increased 2.6% in the first two days of the week. Gold advanced 1.5% in October after retreating 3.4% in September. The yellow metal is down 1.7% so far in 2021. The December contract is currently down $6.40 (-0.34%) to $1,857.50 and the DG spot price is $1,857.80.
U.S. consumer prices jumped 6.2% in October, the biggest surge in more than 30 years, amid higher prices for energy, housing and transportation, the Labor Department reported Wednesday. The figure topped economists’ estimates of 5.9% and renewed pressure on the Federal Reserves and other central banks to stop treating inflation as temporary and consider an interest rate increase sooner rather than later.
Investors were awaiting this morning’s release of the University of Michigan consumer sentiment index for further direction, along with five-year inflation expectations.
The Fed, the Bank of England and the European Central Bank all indicated last week that they expected inflation to be transitory.
Also this week, data out of China showed producer prices climbed at the fastest pace in 26 years. Both producer prices and the consumer price index rose at faster paces than anticipated.
In addition to the U.S. CPI figures Wednesday, the Labor Department reported applications for new unemployment benefits fell to a pandemic-era low last week. Meanwhile, U.S. wholesale inventories rose 1.4% in September as companies stocked up ahead of the holiday season.
December silver futures increased 2.1% Thursday to settle at $25.30 an ounce on Comex as the front-month contract rallied 4.7% in the first four days of the week. Silver rose 8.6% last month after dropping 8.2% in September, its fourth consecutive monthly decline. The metal is down 4.2% so far this year. Silver prices are tied to industrial demand. The December contract is down $0.176 (-0.70%) to $25.125 and the DG spot price is $25.10.
Spot palladium gained 1.5% Thursday to $2,073.50 an ounce and rising 3.4% so far this week. It rallied 4.3% in October after declining 23% in September. It’s down 15% so far in 2021. The DG spot price is currently down $0.10 to $2,079.50.
Spot platinum advanced 1.5% Thursday to $1,095.30 an ounce and is up 5.2% so far this week. The metal rose 6% in October after losing 5.3% in September. It’s up 2% so far this year. Currently, DG spot price is down $13.50 to $1,082.50.
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