Dec Comex gold (GCZ20) on Wednesday closed up +2.7 (+0.14%), and Sep silver (SIU20) closed down -0.070 (-0.27%).
Precious metals on Wednesday settled mixed with silver at a 1-1/2 week low. Higher global bond yields have prompted massive long liquidation pressure in metals positions over the past two days. Also, strength in stocks on Wednesday curbed the safe-haven demand for precious metals. Metals prices recovered from their worst levels after the dollar weakened on dovish Fed comments.
A larger-than-expected increase in U.S. consumer prices on Wednesday was hawkish for Fed policy and helped push T-note yields higher, which weighed on precious metals prices. The U.S. July core CPI rose +0.6% m/m and +1.6% y/y, stronger than expectations of +0.3% m/m and +1.1% y/y, with the +0.6% m/m gain being the largest monthly increase in 29 years. The jump in consumer prices sparked a jump in T-note yields as the 10-year T-note yield rose to a 5-week high of 0.690%.
Higher global bond yields also prompted liquidation of long metals positions after the UK 10-year gilt yield jumped to a 1-3/4 month high Wednesday of 0.244%. Also, the 10- yield German bund yield rose to a 3-week high of -0.434%, and the Japan 10-year JGB bond yield climbed to a 1-1/4 month high of 0.047%.
European economic data on Wednesday was bearish for gold but supportive for industrial metals demand and silver prices. UK June manufacturing production rose +11.0% m/m, stronger than expectations of +10.0% m/m, and the biggest increase since the data series began in 1968. Also, the UK June construction output rose +23.5% m/m, stronger than expectations of +15.0% m/m and the most since the data began in 2010. Conversely, Eurozone June industrial production rose +9.1% m/m, weaker than expectations of +10.0% m/m.
Gold prices recovered their losses Wednesday and closed modestly higher after the dollar fell on dovish Fed comments. Boston Fed President Rosengren said that failure to contain the virus is "likely to prolong the economic downturn." Also, Dallas Fed President Kaplan said the virus resurgence has muted the U.S. economic recovery, and he sees the U.S. jobless rate closer to 9% by year-end.
Gold still has safe-haven support from the Covid pandemic wave that is sweeping the U.S. and other areas of the world. Confirmed cases of Covid have risen above 20.5531 million globally, with deaths exceeding 746,000.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. Long gold positions in ETFs last Thursday rose to a new record high of 3,388.41 metric tons (data since 2002). Also, long silver positions in ETFs rose to a new record high of 883.637 million troy ounces last Friday.
https://www.barchart.com/story/futures/quotes/GC*0/futures-prices/77844/metals-settle-mixed-as-gold-rebounds-from-a-3-week-low-on-a-weak-dollar
