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Precious metals were quite downbeat on Wednesday morning, pressured further by increasingly hawkish comments made by members of the US Federal Reserve. The latest of these was by Minneapolis Fed President Neel Kashkari who warned the market against underestimating price pressures and that the Fed was obliged to keep raising interest rates if inflation would not let up.
Investors also looked forward to the Jackson Hole symposium, coming up on Friday, where Fed chair Jerome Powell is expected to provide more clarity on the size and extent of upcoming interest rate hikes. Gold was trading flat at about $1,745 per troy ounce, after having gained slightly in the previous trading session.
According to Piero Cingari, analyst at Capital.com, " The major advanced economies’ depressing PMI releases from yesterday point to an ongoing slowdown in economic activity.This gave gold and precious metals some breathing room, but the gains were quickly reversed by the market’s still cautious attitude as it awaits the Federal Reserve’s Jackon Hole Symposium this weekend.
The market is concerned that negative economic data, which signal an impending recession, may no longer be sufficient to allay concerns about interest rate hikes, as energy prices (see natural gas and oil) resume their ascent.If market risk aversion returns noticeably, gold-silver and gold-copper ratios could pick up again."
Silver dropped 0.5% to $19.0 per troy ounce, having fallen on the day, but still managed to claw its way above the critical $19 mark, after having traded in the high $18 per troy ounce mark for the last few days.
Platinum dropped 0.6% to $874 per troy ounce, hovering near a one-month low as the precious metal was increasingly pressured by hawkish Fed comments, as well as a bearish view of the auto manufacturing industry. Palladium traded mostly flat at about $1,975 per troy ounce.
Copper dropped 0.9% to $3.6 per pound, but had still gained more than 16% since mid-July, largely supported by supply fears as top producer China faced power outages and energy rationing during record-setting heatwaves. Iron ore fell from CNY 709 per tonne in the previous trading session to about CNY 703 per tonne on Wednesday morning. Aluminium rose from $2,421 per tonne in the last session to $2,436 per tonne on Wednesday.
The US dollar (DXY) dipped from 109.2 in the previous trading session to about 108.7 on Wednesday morning.
The US Treasury yields traded mostly flat at about 3.0%.
The Van Eck Gold Miners ETF (GDX) inched up 1.6% to $25.6, however, had a weekly fall of 3.3%.
The Van Eck Junior Gold Miners ETF (GDXJ) inched up 1.9% to $31.7 but also saw a weekly decline of about 4.7%.
The S&P Global Metals and Mining ETF (XME) inched up 2.4% to $51.0, with a weekly gain of about 1%.
Glencore (GLEN) edged up 2.7% to $5.0, with a weekly advance of about 4.5%.
Rio Tinto (RIOgb) dropped 0.7% to AUD 96.9, with a weekly rise of about 1.1%.
Anglo American (AALI) climbed 2.4% to GBP 29.3, with a weekly fall of about 3.1%.
Antofagasta (ANTO) advanced 2.9% to GBP 11.5, with a weekly rise of about 2.5%.
UK’s year-on-year inflation rate for July was announced on Wednesday, soaring from 9.4% in June, to 10.1% in July, higher than consensus estimates of 9.8%.
UK’s retail price index year-on-year for July was also announced, which also rose to 12.3% in July, from 11.8% in the previous month, missing the 12% consensus.
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