Last week, the price of gold dropped following an unexpected rise of 0.6% in last month’s producer price index as reported by the Bureau of Labor Statistics under the department of labor. The increase in producer price index is higher than its 0.3% forecast. This increase also reduced expectations of an interest rate cut by the Fed and boosted the dollar as well as Treasury yields.
Spot gold hit $2,161.39 an ounce, a 0.6% drop. This is quite a decline from its record price of $2,194.99 an ounce, as recorded on March 8, 2024. U.S. gold futures also dropped by the same margin to reach $2,167.50 per ounce. The dollar gained by the same margin, which made the precious metal less attractive for holders of other currencies. Benchmark 10-year note yields recorded a new high during the same period.
Chris Gaffney, EverBank president of world markets, stated that the bank expected to continue seeing pressure on the precious metal, particularly because the data showed that the labor market as well as the overall United States economy was strong. Gaffney added that this made investors question how soon the Federal Reserve would begin reducing interest rates. EverBank is a diversified financial services company based in the United States that offers banking and investment services.
Last month, producer prices in the U.S. rose more than expected amid an increase in the cost of goods such as food and gasoline, which raised concerns that inflation was rising again. Increasing inflation adds pressure on the Federal Reserve to maintain high interest rates, weighing on nonyielding assets such as gold.
Despite this, traders continue to hope that rates of interest will have dropped by June, betting on a roughly 60% chance. This is a slight drop from the 72% chance recorded prior to consumer price index data.
The Federal Reserve is expected to maintain steady rates at its policy meeting this week. The focus should be centered on dot plot projections.
Gaffney also explained that gold was an uncertainty hedge, an inflation hedge with more uncertainty and higher inflation. He noted that this offered a good floor for the pricing of precious metals.
During this same period, the price of palladium increased to $1,067.79 an ounce, representing a 0.8% increase. Spot platinum slipped to $930.95 an ounce, a 0.8% drop. The price of silver also dropped to $24.83, representing a 0.8% drop. This comes after the metal hit a more than three-month high earlier in this year.
The drop witnessed in the price of gold is unlikely to put a damper on the plans of exploration and mine development companies such as Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) since the long-term outlook for the precious metal is positive.
NOTE TO INVESTORS: The latest news and updates relating to Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are available in the company’s newsroom at http://ibn.fm/ELRRF
About MiningNewsWire
MiningNewsWire (“MNW”) is a specialized communications platform with a focus on developments and opportunities in the Global Mining and Resources sectors. It is one of 60+ brands within the Dynamic Brand Portfolio @ IBN that delivers: (1) access to a vast network of wire solutions via InvestorWire to efficiently and effectively reach a myriad of target markets, demographics and diverse industries; (2) article and editorial syndication to 5,000+ outlets; (3) enhanced press release enhancement to ensure maximum impact; (4) social media distribution via IBN to millions of social media followers; and (5) a full array of tailored corporate communications solutions. With broad reach and a seasoned team of contributing journalists and writers, MNW is uniquely positioned to best serve private and public companies that want to reach a wide audience of investors, influencers, consumers, journalists and the general public. By cutting through the overload of information in today’s market, MNW brings its clients unparalleled recognition and brand awareness.
MNW is where breaking news, insightful content and actionable information converge.
To receive SMS alerts from MiningNewsWire, text “BigHole” to 888-902-4192 (U.S. Mobile Phones Only)
For more information, please visit https://www.MiningNewsWire.com
Please see full terms of use and disclaimers on the MiningNewsWire website applicable to all content provided by MNW, wherever published or re-published: https://www.MiningNewsWire.com/Disclaimer
MiningNewsWire
Los Angeles, CA
www.MiningNewsWire.com
310.299.1717 Office
Editor@MiningNewsWire.com
MiningNewsWire is powered by IBN
