Gold Weaker Ahead of Fed Chair Comments

Gold Weaker Ahead of Fed Chair Comments

Gold weaker this morning as various Fed Presidents indicate a hawkish lean, pulling the bullion back $9 an ounce, ahead of Fed Chair comments. Investors now await the Fed Chairman’s speech on the Federal Reserve’s tapering timetable at 10 am Central from the central bank’s annual conference typically held in Jackson Hole, Wyoming, but virtual this weekend.

This morning, Philadelphia Fed President Patrick Harker told CNBC that he was in favor of tapering asset purchases “sooner rather than later.” Harker also cast doubt on the efficacy of the Fed’s $120 billion per month of asset purchases, saying they weren’t “doing a whole lot right now.”

The yellow metal shrugged off this morning’s U.S. Core Personal Consumption Expenditure (PCE) Index that shows inflation rose 0.4% in July. That is the fifth sizable jump in a row, driving the past year’s rate to a 30-year high, as the nation still struggles to recover from the pandemic.

Gold had come under pressure Thursday, as bullish economic data made riskier assets more attractive investments, but it was underpinned by uncertainty caused by the spread of the delta variant of the coronavirus and the situation in Afghanistan.

December gold futures rose 0.2% Thursday to settle at $1,795.20 an ounce on Comex. The precious metal advanced 0.6% in the first four days of the week. Gold is down 1.2% so far this month after increasing for the third time in four months in July. The yellow metal climbed $372 – or 24% – in 2020 because of uncertainty about the economy and the pandemic and is down 5.3% so far in 2021. Currently, the December contract is down $3.80 (-0.21%) an ounce to $1,791.40 and the DG spot price is $1,789.50.

Investors will be looking to the Fed conference to gauge when policymakers will begin tapering coronavirus stimulus measures, a decision likely linked to the economic and inflationary outlooks. The personal consumption expenditures price index due out Friday is usually closely monitored by investors because it’s an inflation measure closely watched by Fed policymakers.

Fed Chairman Jerome Powell is set to speak Friday. But St. Louis Fed President James Bullard, Kansas City Fed President Esther George and Dallas Fed President Robert Kaplan all downplayed the impact of the delta variant Thursday.

The worsening pandemic — reignited in recent weeks by the spread of the delta variant — has helped support gold: Vaccines are considered less effective against the variant, which is more easily transmissible and has sent case counts and hospitalizations skyrocketing.

The U.S. economy grew at a 6.6% rate in the second quarter, slightly faster than the 6.5% initially reported, because of stronger consumer spending and exports, according to data released Thursday. Meanwhile weekly initial jobless claims held near a pandemic-era low in separate data from the Labor Department. Also supporting gold, a bombing at the airport in Kabul killed at least 13 U.S. service members, derailing many evacuations linked to the U.S. military withdrawal from Afghanistan.

December silver futures fell 1% Thursday to settle at $23.60 an ounce on Comex. The front-month contract increased 1.9% in the first four days of the week. Silver has lost 7.6% 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 December contract is currently down $0.126 (-0.53%) an ounce to $23.470 and the DG spot price is $23.44.

Spot palladium fell 1.3% Thursday to $2,411.50 an ounce and is up 5.6% so far this week. It’s down 9.8% in August and down 1.6% so far in 2021. Currently, the DG spot price is up $11.60 an ounce to $2,422.00.

Spot platinum dropped 1.7% Thursday to $986.70 an ounce and is down 1.6% so far this week. The metal has decreased 6.7% in August and is down 8.1% in 2021. The DG spot price is currently up $10.70 an ounce to $998.20.


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