Gold Drops on Powell Renomination

(November 22nd, 2021 - Dillon Gage)

Gold drops $10 an ounce on White House announcement that Fed Chair Powell will be renominated to his position. The yellow metal was already under pressure from the stronger dollar and treasurys.

However, Pres. Biden’s decision to keep Powell rallied the dollar and had a positive impact on equities. U.S. Stocks are set to kick off the short holiday week with a bang. Futures on the Dow Jones Industrial Average gained 155 points, while the S&P 500 futures and Nasdaq 100 futures also both traded up by about 0.4%.

February gold futures dropped 0.8% last week to settle at $1,854.30 an ounce on Comex. The front-month contract, which rolled to February from December last week, retreated 0.6% Friday. Gold advanced 1.5% in October after retreating 3.4% in September. The yellow metal is down 2.2% so far in 2021. The February contract is currently down $25.60 (-1.38%) an ounce to $1,828.70 and the DG spot price is $1,817.60.

The precious metal lost steam after reaching a five-month high last week following a surge in consumer prices for October. U.S. consumer prices jumped 6.2% in October, the biggest increase in more than 30 years, the Labor Department reported last week.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.8% Friday to 985 metric tons, Reuters reported.

Speculators boosted their net long positions on Comex futures and options to 164,043 in the week ended Nov. 16, according to the Commodity Futures Tradition Commission’s weekly Commitments of Traders report, released Friday.

Fed Governor Christopher Waller said Friday that he’d favor a faster taper of the central bank’s pandemic stimulus measures because of surging inflation. That may include a pivot off near-zero interest rates. The Fed is likely to discuss the taper pace at the mid-December meeting of Fed policy makers, Fed Vice Chair Richard Clarida also said Friday.

In economic news, investors will be watching for the release of PMI data Tuesday from the U.S. and the Eurozone. Wednesday brings minutes of the last meeting of Federal Reserve policy makers, which will be closely parsed for indications on the timetables for interest rate increases. Also scheduled Wednesday are data on U.S. wholesale inventories, new home sales, GDP, initial jobless claims, U.S. durable goods and University of Michigan consumer sentiment.

U.S. financial markets — including Comex — are closed Thursday for the Thanksgiving Day holiday.

March silver futures decreased 2% last week to settle at $24.84 an ounce on Comex. The front-month contract, which rolled from December last week, lost 0.5% Friday. Silver rose 8.6% last month after dropping 8.2% in September, its fourth consecutive monthly decline. The metal is down 5.9% so far this year. Silver prices are tied to industrial demand. The March contract is down $0.044 (-0.18%) an ounce to $24.800 and the DG spot price is $24.54.