August 3rd, 2022

US-China tensions gave gold a boost, but US Treasury yields restrained it. The price of gold dropped from its one-month high on Wednesday as a result of rising Treasury yields brought on by many hawkish remarks made by Federal Reserve officials.

For investors seeking a safe haven, the rise in Treasury yields makes gold a less alluring investment. In their comments, Chicago Fed President Charles, Cleveland Fed President Loretta Mester, and San Francisco Fed President Mary Daly discussed how much longer the central bank will boost interest rates and whether it might consider lowering them in early 2023.

Further guidance will be provided to investors on Wednesday when the Institute for Supply Management releases its July services index data and a report on June factory orders. Investors are also keeping a careful eye on important employment numbers later this week, such as the Friday-due July employment report for the United States.

On the Comex on Tuesday, front-month gold futures increased by 0.1 percent to settle at $1,789.70 per ounce. In the first two trading days of the week, the December contract rose by 0.4 percent. After declining 2.2 percent in June and 3.3 percent in May, which was the weakest month since September, gold fell 1.4 percent in July. In 2021, the metal decreased 3.5%.

According to Reuters, holdings in SPDR Gold Trust, the biggest gold-backed exchange-traded fund in the world, decreased 0.3 percent on Tuesday to 1,002.97 metric tons. Although the Fed will need to keep raising interest rates to fight inflation, St. Louis Fed President James Bullard said on Tuesday that he continues to believe the U.S. economy can avoid a recession. According to Daly, Fed policymakers are still committed to bringing inflation down to approximately 2%. Following a similar increase at its meeting in June, the Fed increased interest rates by another 75 basis points last week in an effort to contain the inflationary trend.

The personal consumption expenditures index, the Fed's preferred inflation indicator, rose to its highest level in June since January 1982, according to figures released on Friday. The Bureau of Economic Analysis reports that the PCE increased 6.8% in June. According to a recent study, the consumer price index in the United States increased 9.1% in June.

According to data released on Monday, U.S. manufacturing increased at its weakest rate in two years in July. However, the factory activity index from the Institute for Supply Management came in at 52.8, slightly higher than the median estimate of 52 made by economists surveyed by Bloomberg. 53 were involved in June.

Gold prices have remained high due to recession fears, hostilities between the United States and China over Taiwan, persistent uncertainty about the epidemic, and the conflict in Ukraine.

On the Comex on Tuesday, September silver futures decreased 1.1 percent to settle at $20.14 an ounce. In the first two days of the week, the front-month contract dropped by 0.3%. Tuesday also saw a 5.3 percent drop in spot palladium to $2,100.00. In the first two days of the week, it fell by 2.7 percent. Palladium experienced its largest monthly fall since September in May, when it fell 14.5%, before rising 9.9% in July. In 2021, it decreased by 22%.

On Tuesday, spot platinum increased by 0.3% to $916.20 per ounce. This week, it has gained 1.1 percent so far. After declining 7.2% in June, platinum retreated by 0.3% in July. In the previous year, it fell 9.4%.