Global Precious MMI: Gold prices drop in June, bounce back after Fed chairman’s testimony

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The Global Precious Monthly Metals Index (MMI) fell by 5.2% for this month’s reading, as gold prices dipped throughout June.

July 2021 Global Precious MMI chart

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Gold price slides in June

gold price

Olivier Le Moal/Adobe Stock

The gold price lost steam in June.

The price opened the month at around $1,870 per ounce before closing at just over $1,800 per ounce.

However, the price has showed some signs of recovery in early July. Gold neared $1,830 per ounce as of Wednesday.

Meanwhile, the U.S. dollar gained strength throughout June. (Gold and the dollar are typically inversely correlated.)

The U.S. dollar index opened June at just under 90 before closing the month at 92.44.

Elsewhere, 30-year treasury yields have dipped below 2% for the first time since February.

The 30-year yield opened June at 2.30% before closing the month at 2.06%. The 30-year yield then fell to 1.91% to July 8.

The 10-year yield opened June at 1.62% and closed the month at 1.45%.

Powell comments on economic outlook

Meanwhile, the gold price gained Tuesday, in part aided by Federal Reserve Chairman Jerome Powell’s testimony before the House Committee on Financial Services.

Overall, Powell touted an improvement in economic conditions.

“Over the first half of 2021, ongoing vaccinations have led to a reopening of the economy and strong economic growth, supported by accommodative monetary and fiscal policy,” he said Wednesday. “Real gross domestic product this year appears to be on track to post its fastest rate of increase in decades. Household spending is rising at an especially rapid pace, boosted by strong fiscal support, accommodative financial conditions, and the reopening of the economy. Housing demand remains very strong, and overall business investment is increasing at a solid pace.”

Powell also noted that while labor conditions have improved, there is still “a long way to go.”

The unemployment rate in June remained at 5.9%.

Furthermore, he noted a concern that has been raised across numerous sectors, including construction and other metal-buying industries: rising inflation.

“Inflation has increased notably and will likely remain elevated in coming months before moderating,” he said. “Inflation is being temporarily boosted by base effects, as the sharp pandemic-related price declines from last spring drop out of the 12-month calculation. In addition, strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind.”

Despite rising inflation, Powell said the Fed intends to maintain its current monetary policy. As such, the Fed will “maintain the current target range for the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.”

In addition, he said the Fed will continue to increase its holdings of Treasury securities and agency mortgage‑backed securities until “substantial” further progress has been made toward the Fed’s maximum-employment and price-stability goals.

Newmont Corporation releases first climate strategy report

Gold miner Newmont Corporation last month released its first climate strategy report.

Newmont aims to reduce its Scope 1 and Scope 2 emissions by 32% and its Scope 3 emissions by 30% by 2030.

In addition, the miner aims to replace 10% of its fossil-fuel-based electricity generation with renewables by 2030.

The company also announced a $500 million Carbon Reduction Fund that will invest in “climate change initiatives over the next five years, the 63-page report states.

Actual metals prices and trends

The U.S. silver ingot/bars price fell by 6.5% month over month to $26.12 per ounce as of July 1.

Meanwhile, the U.S. platinum bars price fell 9.6% to $1,064 per ounce. The palladium bar price dipped 0.7% to $2,709 per ounce.

In addition, the U.S. gold bullion price fell 7.0% month over month to $1,770 per ounce. The Chinese gold bullion fell 7.1% to $57.33 per gram.

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