Gold futures recovered early losses to extend their winning streak to a third session in a row on Thursday, settling at a nearly one-month high. Investors turned to the latest U.S. economic data and Federal Reserve Chairman Jerome Powell’s congressional testimony for clues on the metal’s future path, but there appeared to be little reason to make any significant changes.
August gold GCQ21, +0.27 percent GC00, +0.27 percent rose $4, or 0.2 percent, to $1,829 an ounce, the highest level since June 16, according to the most-active contract. For the third consecutive session, prices rose. Silver futures for delivery in September
+0.43 percent SIU21
At $26.39 an ounce, SI00, +0.43 percent gained 12 cents, or 0.5 percent. As the labor market battles to recover from the pandemic, Powell told the House Financial Services Committee on Wednesday that eliminating some of the Fed’s stimulus is still a long way off. Inflation, according to the central bank governor, is a short-term phenomena that will eventually revert to the mean after a COVID-driven increase fueled by supply constraints amid soaring demand. On Thursday, he delivered a similar message before the Senate Banking Committee. In a market update, Naeem Aslam, chief market analyst at AvaTrade, stated, “Remember that the precious metal is very susceptible to a change in interest rates since a hike would entail a rise in opportunity cost for holding the non-interest bearing asset.” “Fears of a short-term interest rate hike were extinguished,” Powell said. On Thursday, economic reports painted a mixed picture of the United States’ recovery from the COVID pandemic. Initial jobless benefit claims in the United States declined to 360,000 from 386,000 the week ending July 10. In June, the US import price index increased by 1%, while prices excluding volatile fuel increased by 0.7 percent. Meanwhile, the Philadelphia Manufacturing Index declined to 21.9 in July from 30.7 the previous month, while the Empire State Manufacturing Index surged to a new high of 43 in July from 17.4 the month before. “Even as consumer price inflation rises, government bond yields have retreated from earlier this year’s highs, and real interest rates have fallen,” said Steven Flood, CEO of GoldCore, in a Thursday editorial. “We expect that trend to continue as markets recognize that, even with greater inflation, central banks will be hesitant to hike interest rates due to huge amounts of government debt.” “It is likely that the Fed, and other central banks, such as the ECB, will continue behind the inflation curve,” Flood said, adding that this does not rule out the possibility of the Fed starting to taper assets in the third quarter. So far this week, both gold and silver prices have risen. In a daily newsletter, analysts at stockbroker Zaner said that it’s “tough to discern the primary bullish force working to increase gold and silver prices this week,” but “we assume that continued resiliency in U.S. Treasury bond prices [lower Treasury rates] are at the top of the list.” It’s also plausible that economic concern, as a result of dismal U.S. statistics and rising COVID delta infection rates, has resulted in a “flight to quality buying interest,” they stated. September copper HGU21, +0.89 percent added 1.3 percent to $4.32 a pound on the Comex on Thursday. October platinum PLV21, +0.64 percent increased by about 0.9 percent to $1,137.70 an ounce, while September palladium PAU21, -3.48 percent fell by 3.4 percent to $2,729.30 an ounce. According to analysts at Zaner, there was a “large outflow” of 9,964 ounces from palladium exchange-traded funds on Wednesday, bringing the year-to-date gain to 8.7%. The palladium market’s inability to hold in positive territory on Wednesday, in the aftermath of the gain in gold, weakening in the US dollar, and “what the market is saying was a dovish” Powell speech to Congress, the Zaner analysts said, should discourage the “bull camp.”/n
