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The precious metals rally continues with solid gains except for gold

Commentaries & Views

Except for gold, the remaining precious metals traded on the futures markets had solid gains continuing the precious metals rally. Although gold was the only precious metal to close with modest declines, on closer inspection it was all about dollar strength rather than a lack of buying interest that moved gold lower on the day. After a fractional decline yesterday the dollar gained 0.32% taking the U.S. dollar index to 95.81.

As of 4:16 PM, EST spot gold is currently fixed at $1838.90. According to the KGX (Kitco Gold Index), there was fractional buying resulting in a gain of $2.80 per ounce. However, dollar strength resulted in headwinds of $4.20 resulting in a fractional decline of $1.40. The February Comex gold futures contract is currently down $3.40 or 0.18% fixed at $1839.80.

The remaining precious metals; silver, palladium, and platinum all closed higher for the last three consecutive days, gaining over 1% in trading today. Palladium continues to lead the path with the largest percentage gain today of 2.57%. Basis the most active March 2022 Comex contract palladium futures gained $45.10 and is currently fixed at $2053.50. March platinum gained 1.23%, and after factoring in a gain of $12.40 is currently fixed at $1041. Lastly, March silver gained 1.21% or $0.294, and is currently fixed at $24.525.

In the last three days palladium has gained 9.783%, platinum is gained 7.84% and silver has gained 6.65%. In the case of platinum and palladium, the respectable gains over the last three days can be somewhat attributed to where those precious metals are primarily mined which is Russia and South Africa. With the current uncertainty surrounding Russia who continues to amass troops on their border with Ukraine the recent spike in both platinum and palladium prices is benefiting from that geopolitical uncertainty.

Most importantly is the current level of inflationary pressures in the United States with the December 2021 CPI coming in at a 40 year high of 7% which has created bullish market sentiment for all of the precious metals. With the January FOMC meeting scheduled to begin next Tuesday and conclude the following day the fact that all of the precious metals have for the most part gained value magnifies market participants' concern over the level of inflation.

Most analysts believe that there is a high probability that the Federal Reserve will raise rates by ¼% three or four times this year, and announce the onset of interest rate hikes after this month’s FOMC meeting. According to the CME’s FedWatch, there is an 89.9% probability that the first-rate hike of ¼% will occur in March and a 5.3% probability that the Federal Reserve will raise interest rates by ½ a percent. Lastly, the CME’s FedWatch tool predicts that there is a 4.8% probability that interest rates will remain at their current level in March. Just yesterday the FedWatch tool was predicting that there was a 94% probability that the first ¼% rate hike would occur in March.

Wishing you as always good trading and good health,

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.