Gold Struggles Back From Four-Month Low

Gold Struggles Back From Four-Month Low

Gold struggles back from touching four-month low in early Asian trading. The yellow metal is back above $1,740 an ounce after a short-lived drop below $1,700 overnight on speculation that the Federal Reserve may taper the easy monetary policy triggered by the coronavirus pandemic sooner than previously expected.

The precious metal tumbled $60 in minutes at the open on bets that the central bank could soon start decreasing its massive fiscal stimulus efforts. The dollar rallied to a two-week high, adding further pressure to the yellow metal.

December gold futures fell 3% last week to settle at $1,763.10 an ounce on Comex after the front-month contract dropped 2.5% Friday. The precious metal increased 2.6% in July and advanced for the third time in four months. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 7% so far in 2021. Currently, the December contract is down $18.70 (-1.06%) an ounce to $1,744.40 and the DG spot price is $1,743.60.

Holdings in SPDR Gold Trust, the world’s largest gold-back exchange traded fund fell to 1,025.28 metric tons Friday from 1,027.61 metric tons Thursday, Reuters reported.

Speculation over an early Fed taper mounted after a strong jobs report for July came out on Friday. The U.S. employers added 943,000 jobs last month, the most since August 2020, and the unemployment rate fell to a pandemic-era low of 5.4%, according to Labor Department data released Friday.

The report — a key barometer of the state of the economy — came after a series of comments by Fed officials hinting at an early taper. If interest rates go up, it typically makes gold less attractive as an alternate investment. The yellow metal is also used as a hedge against both uncertainty and inflation, which an early rate cut may tackle.

Investors will be looking to the release of core U.S. inflation data on Wednesday and the latest weekly initial jobless claims Thursday for additional economic signals.

But gold still maintains some support from uncertainty about the delta variant and signals that the pandemic has yet to run its course. Infection rates are rising even in countries previously credited for containing the coronavirus.

September silver futures fell 4.8% last week to settle at $24.33 an ounce on Comex after the front-month contract plunged 3.8% Friday. It dropped 2.5% in July. The metal rose 47% in 2020 and is down 7.9% 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 currently down $0.456 (-1.87%) an ounce to $23.870 and the DG spot price is $23.88.

Spot palladium lost 1.2% last week to $2,642.00 an ounce after decreasing 1% Friday. It fell 4.3% in July and is up 7.8% so far in 2021. The current DG spot price is down $7.80 and ounce to $2,637.50.

Spot platinum retreated 6.3% last week to $990.80 an ounce after dropping 2.8% Friday. The autocatalyst decreased 2.1% in July and is down 7.7% in 2021. Currently, the DG spot price is up $1.50 an ounce to $988.70.


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