Gold touches one-week high early Friday, aiming for its first weekly gain in five weeks, after the dollar came off two-decade highs, reigniting haven demand for the yellow metal.
Gold rebounded from three-and-a-half month lows reached earlier this week as investors sought bargains and protection from an economy that may be worsening. But China bolstered the broader market early Friday by lowering a key interest rate — the five-year loan prime rate — by a record amount.
August gold futures rose 1.4% Thursday to settle at $1,847.80 an ounce on Comex. The most-active contract rolled to August from June this week, and the front-month futures increased 2.2% in the first four days of the week. Gold retreated 2.2% in April, its worst month since September, and 3.5% in 2021. Currently, the June contract is currently down $2.70 (-0.15%) an ounce to $1,838.50 and the DG spot price is $1,841.20.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.7% Thursday to 1,056.18 metric tons, ending a recent streak of declines, according to Reuters.
Investors are increasingly concerned that a series of aggressive interest-rate hikes by the Federal Reserve to stem inflation will derail economic growth. Gold is a traditional hedge against that type of uncertainty. The yellow metal is also getting a boost from uncertainty around the war in Ukraine and the ongoing pandemic.
The U.S. index of leading economic indicators declined in April, a report Thursday showed, signaling a softening in economic growth may be ahead. In other economic news Thursday, U.S. weekly initial jobless claims for last week rose to the highest level since January, the Philadelphia Fed’s manufacturing index fell to the lowest level in two years and existing home sales dropped to the lowest level since the start of the pandemic.
But most investors expect the Fed to raise rates another half percentage point to a range of 1.5% to 1.75% at policymakers’ next scheduled meeting in June, according to the CME’s FedWatch Tool. It increased benchmark rates by half a percentage point earlier this month, in the second rate hike of 2022 and the largest in 22 years. Rate increases are typically considered bearish for gold.
Strength in the dollar in recent weeks — on the back of aggressive monetary policy — has also pressured gold, which is priced in dollars and becomes more expensive for holders of other currencies when the dollar goes up.
Front-month silver futures gained 1.7% Thursday to settle at $21.91 an ounce on Comex. The July futures contract advanced 4.3% in the first four days of the week. Silver lost 8.2% in April, its worst monthly performance since September. It fell 12% in 2021. Silver prices are tied to industrial demand. The July contract is currently off $0.058 (-0.26%) an ounce to $21.850 and the DG spot price is $21.91.
Spot palladium increased 0.4% Thursday to $2,045.00 an ounce, and it’s up 4% in the first four days of the week. The metal advanced 2.6% in April after declining 8.5% in March. It retreated 22% in 2021. Currently, the DG spot price is up $18.10 an ounce to $2,046.50.
Spot platinum jumped 3.3% Thursday to $976.90 an ounce and is up 3.1% so far this week. The metal dropped 4.4% last month after declining 4.2% in March. It lost 9.4% last year. The current DG spot price is up $0.30 an ounce to $972.00.
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