Gold rises amid pandemic concerns early Friday, making up for ground lost in the first part of the week. Concerns about the potential for long-term COVID-19 affects on the global economy continue to be a primary driver.
The yellow metal has remained basically steady after the release of this morning’s U.S. economic data for July which saw the annual core PCE Price Index hit higher than expected in July and consumer spending take a modest leap.
The Personal Consumption Expenditures (PCE) Price Index rose 0.3% in July (on a monthly basis) according to the US Bureau of Economic Analysis. On a yearly basis, the Index hit 1%, missing the market expectation of 1.2%.
U.S. consumers increased their spending by 1.9% last month, a dose of support for an economy. The July gain marked the third straight monthly increase in consumer spending, the primary driver of the U.S. economy, but represented a slowdown from the previous two months.
Comments from Federal Reserve Chairman Jerome Powell on Thursday that the central bank’s monetary policy would remain accomodative gave metals a boost, as stimulus measures are typically bullish for gold. Powell announced a shift in Fed policy during the annual symposium typically held in Jackson Hole, Wyoming, but livestreamed this year.
The Fed will allow inflation to run “moderately” above its 2% goal to provide some fuel to the labor market and broader economy, he said. That means that the Fed will be less inclined to raise interest rates when the unemployment rate falls as long as inflation also rises. Treasury yield jumped.
Gold futures fell 1% Thursday to settle at $1,932.60 an ounce on Comex. The December contract decreased 0.7% in the first four days of the week. Futures are down 2.7% so far this month. Many investors have been taking profits since the contract closed at a high of $2,069.40 on Aug. 6. The yellow metal is up more than $400 — or 27% — so far this year. The December contract is currently $1,962.30 an ounce, while the DG spot price is $1,959.80.
Silver futures dropped 1.5% Thursday to settle at $27.20 an ounce on Comex, but the December contract is up 1.2% so far this week. The most active contract has gained 12% so far this month after soaring 30% in July. The December contract is currently $27.63 an ounce, while the DG spot price is $27.52.
Another million new applications for unemployment benefits were filed last week, according to the weekly U.S. initial jobless claims report released Thursday. It was the 22nd time in 23 weeks that the figure topped 1 million, amid the economic impact of the coronavirus pandemic and associated lockdowns.
The virus known as COVID-19 has killed more than 830,000 people worldwide and sickened 24.4 million. About 24% of the cases — and 22% of the deaths — are in the U.S. The country has 5.87 million cases, more than any other nation.
In upcoming economic news, U.S. personal spending data was due out Friday.
Republicans officially nominated President Donald Trump for re-election at their quadrennial convention this week, and he accepted in a speech Thursday night. Democrats nominated Joe Biden last week.
Spot palladium decreased 0.6% Thursday to $2,187.40 an ounce and is down 40 cents so far this week. Spot platinum fell 1.1% Thursday to $931.00 an ounce, and it’s up 0.5% for the four days of the week.
