Gold striving for big weekly rally, in spite of a key inflation indicator coming in lower than expected this morning. Still, the yellow metal is looking at its biggest rally in more than two months after the Federal Reserve this week signaled that it was likely to maintain its easy monetary policy in the near term and the dollar remained soft.
The personal consumption expenditures price (PCE) index, a leading inflation indicator for the Fed, rose 3.5% in June. While it’s ahead of May’s 3.4% number, it is lower than the forecast 3.6%. This represents the biggest move since July 1991. Meanwhile, consumer spending jumped last month. The government reported a 1% spending boost in June as the economy continues to rebuild.
Gold, which jumped 1.7% Thursday, is a traditional hedge against inflation.
Uncertainty about the delta variant and the reimposition of mask guidelines in the U.S. and lockdowns around the world also boosted gold.
December gold futures rose $31.20 Thursday to settle at $1,835.80 an ounce on Comex. The front-month contract, advanced 1.7% so far this week, with almost all of the rally occurring on Thursday. The precious metal has increased 3.6% so far in July and was poised for its third monthly increase in four months. after falling 7% in June — the worst month for the precious metal since November 2016. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 3.1% so far in 2021. The December contract is currently down $7.50 (-0.41) an ounce to $1,828.30 and the DG spot price is $1,826.20.
The dollar was heading for its worst week since May, making gold a cheaper investment for holders of other currencies.
Fed Chairman Jerome Powell said Wednesday that while central bank officials are getting closer to being able to reduce stimulus measures, that time hasn’t come yet.
“We’re not there,” he said at a press conference after a regular meting of policy makers. “And we see ourselves as having some ground to cover to get there.”
The U.S. economy grew 1.6% in the second quarter, returning to its pre-pandemic level, while weekly initial jobless claims dropped near a pandemic low last week, separate data released Thursday showed. But the spread of the delta variant may derail the economic improvement.
The delta variant of the coronavirus has extended its spread around the world in recent weeks, spurring the U.S. Centers for Disease Control and Prevention to reimpose masking guidelines this week and President Joe Biden to mandate vaccines for all federal workers.
September silver futures rose 3.6% Thursday to settle at $25.78 an ounce on Comex. The front-month contract gained 2.2% in the first four days of the week. The metal is down 1.6% so far this month. Silver fell 6.5% in June after rallying 8.3% in May. The metal rose 47% in 2020 and is down 2.4% so far this year. Silver prices are tied to industrial demand, which could taper if lockdowns are reinstated and dampen manufacturing. The September contract is down $0.167 (=0.65%) an ounce to $25.615 and the DG spot price is $25.65.
Spot palladium increased 0.9% Thursday to $2,661.00 an ounce and lost 0.8% so far this week. It’s down 4.7% in July and up 8.6% so far in 2021. Currently, the DG spot price is up $17.40 an ounce to $2,673.00.
Spot platinum advanced 1.1% Thursday to $1,075.20 an ounce and increased 0.9% so far this week. The autocatalyst is down 0.5% in July and up 0.2% in 2021. The DG spot price is currently down $20.90 an ounce to $1,056.80.
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