Gold Gains On Fed Remarks

Gold Gains On Fed Remarks

Gold gains on Fed remarks as Chairman Powell indicates more measures will likely be needed to pull the economy out of its coronavirus driven nosedive.

Powell did not detail the measures, but pointed to the likely need for more fiscal support from Congress. “While the economic response has been both timely and appropriately large, it may not be the final chapter,” the central bank chief said in this morning’s prepared remarks. Powell told reporters in a subsequent Q&A that the Fed was NOT considering negative interest rates.

The most-active June gold futures contract rose 0.5% Tuesday to settle at $1,706.80 an ounce on Comex. It slid 0.4% in the first two days of the week. Currently, the June contract is $1,712.10, while DG spot is $1,714.80. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.2% Tuesday to 1,083.66 metric tons.

Support for the yellow metal continues to come from investors who are turning to it as a hedge against economic uncertainty, but the worsening economy and dwindling physical demand have capped the advance above $1,700 an ounce.

The International Monetary Fund will cut its global economic forecasts next month because of the growing economic impact of the virus, IMF Managing Director Kristalina Georgieva told The Financial Times. Last month, the IMF predicted a 3% contraction in global growth this year, with developing economies estimated to shrink 1% and advanced economies 6.1%.

“With the crisis still spreading, the outlook is worse than our already pessimistic projection,” she said. “Without medical solutions on a global scale, for many economies a more adverse development is likely.”

The top U.S. health experts testified before a Senate committee Tuesday that the coronavirus crisis which triggered the global economic meltdown may still grow out of control. The virus known as COVID-19 has killed almost 292,000 people worldwide and sickened almost 4.26 million. About 32% of the cases are in the U.S., though just 28% of the deaths. The U.S. has more cases than any other country. Meanwhile, cities, states and countries began to reopen after lockdowns.

Central banks around the globe have unveiled an estimated $15 trillion in stimulus measures, but the economic picture looks exceedingly grim. U.S. Labor Department data released Friday showed the April jobless rate climbed to 14.7%, and weekly initial jobless claims data show that 33.5 million people have lost their jobs over a seven-week period through May 2. The data for last week come out Thursday. And China will release April industrial-production and retail-sales data on Friday.

Front-month July silver futures increased 0.2% Tuesday to settle at $15.71 an ounce on Comex. The metal dropped 0.4% in the first two days of the week. Currently, the July contract is at $15.66, while DG spot is $15.56. Spot palladium slipped 0.1% Tuesday to $1,910.60 an ounce, though it’s up 0.3% for the first two days of the week. Spot palladium slipped 0.1% Tuesday to $1,910.60 an ounce, though it’s up 0.3% for the first two days of the week. Spot platinum declined 0.9% Tuesday to $766.70 an ounce. It fell 0.7% during the first two days of the week. Currently, DG spot for palladium is $1,869.10 while platinum is $767.50.

 

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