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Gold futures finished sharply higher Wednesday, marking the first back-to-back advance for the commodity in about a month and the sharpest daily rise in two weeks, after investors parsed a reading on U.S. inflation that mostly matched expectations.
December gold
GCZ21,
GC00,
added $21.60, or 1.2%, to settle at $1,753.30 an ounce, following a 0.3% gain on Tuesday. The positive finish marked gold’s first consecutive period of gains since a three-session run ended July 15 and the best daily gain for the most-active contract since July 29, FactSet data show.
Data on consumer prices showed that inflation in July remained at up 5.4% for the second straight month, marking a 20-year high, the Labor Department said Tuesday. Meanwhile, the consumer-price index climbed 0.5% on a month-over-month basis last month, but down from 0.9% in June and it matched the expectations of economists surveyed by The Wall Street Journal.
The closely watched measure of inflation that omits volatile food and energy—the so-called core price index—rose 0.3%, below expectations for a 0.4% gain, and the 12-month rate decelerated to 4.3% from 4.5%, which was a 29-year high. The data may have helped to precipitate a move lower in the dollar and Treasury yields, which helped to pave the way for a further recovery in bullion.
The 10-year Treasury note yield
TMUBMUSD10Y,
slipped to 1.32%, compared with around 1.34% on Tuesday, while the dollar, as gauged by the ICE U.S. Dollar Index
DXY,
a measure of the currency against a half-dozen currencies, was down 0.3%. Falling yields and a weaker dollar can make bullion more attractive to buyers here and abroad.
“Lower yields and a softer dollar are providing some reprieve or gold which has found its way back towards $1,750,” wrote Craig Erlam, senior market analyst at Oanda, in a Wednesday research note.
Meanwhile, Dallas Fed President Rob Kaplan said Wednesday that he will press his colleagues at the central bank to announce a plan to taper bond purchases at its next meeting in late September.
In an interview on CNBC, Kaplan said he wanted the slow down in purchases to start in October and last until June. Kaplan has been pressing his colleagues to start to pull back on its $120 billion in monthly bond and mortgage-backed securities since late April. Kaplan told the business network that he was “divorcing” his views on tapering from his decisions on when to hike rates.
Earlier Wednesday, Kansas City Federal Reserve President Esther George also said the time had come to end the central bank’s bond-buying program. Neither Kaplan nor George are currently voting members of the rate-setting Federal Open Market Committee.
However late Tuesday Chicago Fed’s Charles Evans argued for waiting longer. Evans is a voting member of the Fed’s policy making committee this year.
Fed officials have persistently said that they see inflation readings in the recovery from COVID-19 as temporary, but a number of policy makers, including Kaplan, have begun to outline a plan to end accommodative policies and eventually lift interest rates which would ripple through financial markets and impact gold trading.
Meanwhile, silver for September delivery
SIU21,
was trading 9.6 cents, or 0.4%, higher to settle at $23.488 an ounce, following a 0.5% Tuesday gain.
Elsewhere on Comex, copper for September delivery
HGU21,
rose 1.35 cent, or 0.3%, to settle at $4.3675 a pound, after a 1.5% gain on Tuesday.
Platinum for October
PLV21,
rose $28.60, or 2.9%, to finish at $1,015.60 an ounce, following a 1.7% Tuesday advance; while September palladium
PAU21,
shed $17.20, or 0.6%, to settle at $2,632.80 an ounce, after futures a day ago rose 1.8%.
