Gold’s volatile week continues this morning as it claws its way back from an early morning dip to near $1,940 an ounce. The yellow metal’s week has swung more than $100 an ounce on the Fed rate decision and the ongoing war in Ukraine.
On Wednesday, gold was initially flat when the Federal Reserve voted to raise interest rates for the first time since 2018. For gold, the rate hike was relatively baked in, but the dollar and Treasury yields eased on Thursday as investors had priced in an even stronger rate hike. The dollar’s slump resulted in a boost for the bullion on Thursday. However, the Fed’s more hawkish than expected dot plot is weighing on the future. They are projecting a hike at every meeting going forward in 2022.
Fed Governor Christopher Waller told CNBC that the current “raging inflation” may require the central bank to enact one or more half-percentage-point rate hikes in upcoming months.
Front-month gold futures were unchanged at $1,942.00.an ounce on Comex and is down 2.8% in the first two days of this week. Gold advanced 5.8% last month after dropping 1.8% in January, its worst month since September. It retreated 3.5% in 2021. Currently, the April contract is down -11.1 (-0.57%) an ounce to $1,932.20 and the DG spot price is $1,935.90.
On Thursday, holdings of the world’s largest gold-backed ETF, SPDR Gold Trust, rose to its highest level since March 2021 at 1,073.44 tonnes as reported by Reuters.
The ongoing Russian attack on Ukraine continues to have a major impact on the world’s economies. The Central Bank of Russia (CBR) on Friday announced that it would maintain its key interest rate at 20%, but warned of “large-scale structural transformation” in the country’s economy. shortly after Russian forces invaded Ukraine, the CBR more than doubled the country’s key interest rate from 9.5% to 20% in an effort to prop up its plunging currency and mitigate the impact of tough international sanctions.
Front-month silver futures was little changed on Thursday at $25.34 per ounce, but still set for its first weekly dip in seven. Silver surged 8.8% in February after dropping 4.1% in January. It fell 12% in 2021. Silver prices are tied to industrial demand. The May contract is off currently, down $0.491 (-1.92%) an ounce to $25.125 and the DG spot price is $24.97.
Spot palladium rose 2.5% to $2,572.94 per ounce, but was set for a weekly drop of about 8%, from last week’s record rally to $3,440.76. The metal’s rise was fueled by concerns over the supply of palladium from Russia which produces about 40% of the world’s palladium. While the worries over the supply from Russia have ebbed, the metal is getting support from China signaling it intends ensuring its measures to fight COVID-19 will have minimal impact to its economy and people’s lives. This bodes well for the automobile market in China. The metal’s main use is in catalytic converters for gasoline-powered vehicles. The metal gained 5.3% last month after rallying 24% in January. It retreated 22% in 2021. The current DG spot price up $45.50 an ounce to $2,567.50.
Spot platinum rose 0.2% Thursday to $1,023.36 an ounce but was set for a 5% weekly dip – its worst since November 2021.The metal advanced 1.7% in February after rising 5.7% in January. It lost 9.4% last year. The DG spot price is currently up $5.10 an ounce to $1,041.40.
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