Gold gains 3.2% weekly on Fed backdrop

Gold extended its bull run to end a positive week, as a weaker dollar following inflation data turned investor interest towards the precious metal.

In this climate, his contract of gold August delivery completed transactions at $1,781.8 the ounce, rising 0.7% or $12.6.

In the week the contract strengthened by 3.2%but even so for the whole of July he lost 1.2%.

Silver, after rallying almost 7% yesterday, added more today 1.7% or 33 cents in its price closing at $20.19 the ounce.

The week saw strong gains 7.8%but for the month it was down 0.8%.

The Federal Reserve’s preferred gauge of inflation jumped again in June, defying hopes that the price rally had peaked, with the dollar quickly shedding morning gains after the data was released.

The dollar’s reversal as markets process the data is giving metals a boost again, said Daniel Pavilonis of RJO Futures.

Some of that might be considered safe havens for the market, but overall, it’s just a boost to metals that are “pretty cheap” right now, he adds.

Gold, however, posted its fourth straight monthly decline, having lost more than $300 since topping $2,000 in March, as the Fed began a cycle of aggressive rate hikes and the greenback emerged as a preferred safe-haven amid intensifying recession worries.

The precious metal showed a significant boost yesterday in the wake of J. Powell that the Fed’s stance may need to become less hawkish as it continues further monetary tightening.

But as Jim Wyckoff, senior analyst at Kitco Metals notes, “if we get some more troubling numbers on price inflation, the Fed may need to be more aggressive.”

Remember that higher interest rates increase the opportunity cost of holding gold, which does not provide a stable return on investment.

In the remaining metals, the palladium reinforced by 2.4% closing at $2,129 an ounce, ending July with an 11% rally.

THE platinum he had +1.5% on the day closing at $889.8 an ounce, but finished the month down -0.8%.

THE copper strengthened today by 2.9% to $3.5735 a pound, but lost 3.7% on the month.