Gold And Silver Drop On Rising Dollar

The precious metal’s fall was increased by producer prices growing less than anticipated. But gold prices may have narrowed their losses following the Federal Reserve announced that it would not be exiting from its accommodative monetary management strategy anytime soon.

February gold futures plunged $23.60, or 1.27%, to $1,827.80 per ounce at 15:39 GMT on Friday on the New York Mercantile Exchange’s COMEX division. Gold is on course for a weekly decline of about 1.4%, continuing to its early 2021 slip of 4%.

Silver, the relative commodity to gold, came under $25 on Friday. March silver futures plunged $0.952, or 3.69%, to $24.85 an ounce. The white metal will post a weekly decline of 2.5%, bringing its year-to-date slump to more than 6%.

A strengthening dollar counted on the metals market to finish out the trading week. The US Dollar Index (DXY), which measures the dollar versus a basket of currencies, raised 0.46% to 90.66, from an opening of 90.22. A strong dollar is terrible for dollar-pegged commodities because it makes it more costly for foreign investors to buy.

US financial markets

US financial markets flowed through the injection of economic data. The producer price index (PPI) increased by 0.3% in December, short of the market estimation of 0.4%. The core PPI bound up 0.1%, which was also under the estimate of 0.2%.

Industrial production rose at a rate of 1.6%, manufacturing output increased by 0.9%, and business inventories increased at a rate of 0.5%, and capacity utilization rebounded to 74.5%.

President-Elect Joe Biden’s incentive statement misled gold markets on Thursday night. Investors had penciled in higher than the $1.9 trillion stimuli that Biden put out, including $1,400 direct income assistance payments, an additional $400 in lay-off benefits until September, and billions more for coronavirus vaccines. The incoming president also expects to publish a second spending package to address his long-term spending goals, like combating climate change and decreasing student loan debt.

Meantime, Fed Chair Jerome Powell announced that the US central bank would not be reducing its ultra-aggressive quantitative easing program anytime soon, adding that markets should not be demanding interest rate trips.

Other markets

The US bond market was frequently in the red, with the benchmark 10-year Treasury yield sliding 0.039% to 1.09%. The one-year note crawled 0.002% higher to 0.101%, while the 30-year bond dropped 0.036% to 1.838%.

In other metal markets, March copper futures dropped $0.053, or 1.45%, to $3.6115 per pound. March platinum futures declined $36.40, or 3.23%, to $1,090.00 an ounce. March palladium futures fell $21.80, or 0.9%, to $2,401.50 per ounce.