News
Rising US Dollar Causes Precious Metals to Fall
Gold, copper and silver fell on Thursday after the US dollar rose. Oil also became easier, but iron ore rose.
This occurred despite a lower than expected result for US producer prices in May, which fell 0.2% after jumping 0.5% in April.
The surprise sent the US dollar higher, but US 10-year bonds traded down 4.30% just after 7am Sydney time on Friday, resulting in a 7-point loss. This was the 9th drop in the last 11 sessions.
On Comex, August gold fell nearly $40 at one point before falling 1.5% to $2,319.50, the lowest level since late April.
July silver hit a five-week low and fell 4% to $29.025.
Comex copper fell nearly 2% to $4.48 a pound, also a seven-week low.
In Singapore, however, the price of SGX iron ore rose 2.1% to US$106.81.
US and global oil prices were weaker. West Texas Intermediate fell 0.7% to $78.93 a barrel, while Brent also fell 0.7% to $82.12 a barrel.
May US producer prices (PPI) fell 0.2% month-on-month, against market expectations for a 0.1% increase, and compared to the 0.5% increase in the April report.
Core PPI in May (excluding food and energy) remained unchanged, versus an expected 0.3% month-on-month increase, and compared to a 0.5% increase in the April report.
The subdued PPI report followed a lower consumer price index report on Wednesday and rattled traders who compared the two reports to the “hawkish” language in the Fed’s post-meeting statement and comments from the Fed chairman. Fed, Jay Powell.
He made it clear that there would be no rate cuts until the central bank could see inflation decline sustainably. However, he said there was no pressure for a rate increase!
In other news, initial unemployment claims jumped to 242,000 in the week ending June 8. This is the highest level since August 2023. This comes after 272,000 new jobs were created in May.