Gold up despite lower than expected core inflation. Gold had already gained early Wednesday amid heightened fears that the rapidly spreading delta variant of the coronavirus will derail the economic recovery, though a stronger dollar kept a lid on prices.
While U.S. consumer prices (CPI) did rise 5.4% in July, with the Labor Department reporting the CPI increasing 0.5% on a month-over-month basis, this increase is inline with forecasts from economists.
Meanwhile, “core inflation,” came in lower than expected. Core cpi, which excludes energy and food, rose 0.3% in July, missing the forecasted 0.4% increase and is well below June’s 0.9% rise.
Prices that Americans pay for everyday goods and services accelerated in July, but about where economists had expected. Excluding energy and food, CPI rose by 0.3% last month, shy of economist expectations of a 0.4% increase and well below June’s rise of 0.9%.
Investors awaited the release of core U.S. inflation data later in the day for further direction. The yellow metal is also used as a hedge against inflation, and rising inflation may be a factor in spurring the Federal Reserve to taper its stimulus efforts sooner rather than later.
December gold futures rose 0.3% Tuesday to settle at $1,731.70 an ounce on Comex but dropped 1.8% the first two days of the week. The precious metal is down 4.7% so far this month after increasing for the third time in four months in July. Gold climbed $372 — or 24% — in 2020 because of uncertainty about the economy and the pandemic and is down 8.6% so far in 2021. Currently, the December contract is up $9.40 (+0.54%) an ounce to $1,741.10 and the DG spot price is $1,741.00.
The dollar index traded near a three-week high and U.S. Treasury yields reached their highest levels since mid-July, pressuring gold by making it less attractive as an alternate investment. Tuesday, the Standard & Poor’s 500 Index climbed to an all-time high.
The inflation report due out Wednesday was expected to show that prices paid by U.S. consumers grew at the slowest pace in five months, though they remain elevated.
Investors will also be looking to the release of the latest weekly initial jobless claims Thursday for additional economic signals. Speculation over an early Fed taper mounted last week after a strong jobs report for July came out on Friday. If interest rates go up, it’s typically bearish for gold.
September silver futures rose 0.5% Tuesday to settle at $23.39 an ounce on Comex, but the front-month contract was down 3.8% for the first two days of the week after plummeting Monday. Silver is down 8.4% so far this month after dropping 2.5% in July. The metal rose 47% in 2020 and is down 11% 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 up $0.038 (-0.16%) an ounce to $23.430 and the DG spot price is $23.39.
Spot palladium rallied 2% Tuesday $2,669.00 an ounce and is up 1% so far this week. It fell 4.3% in July and is up 8.9% so far in 2021. The DG spot price is currently down $33.50 an ounce to $2,631.50.
Spot platinum gained 2.2% Tuesday to $1,007.20 an ounce and is up 1.7% in the first two days of this week. The autocatalyst decreased 2.1% in July and is down 6.2% in 2021. Currently, the DG spot price is up $13.50 an ounce to $1,014.00.
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