US dollar surge sends precious metals lower

By Glenn Dyer | More Articles by Glenn Dyer

Gold, copper, and silver fell on Thursday after the US dollar bounced higher. Oil was also easier, but iron ore rose.

This occurred despite a lower-than-forecast outcome for US producer prices in May, which fell 0.2% after April's 0.5% jump.

The surprise saw the US dollar edge higher, but US 10-year bonds traded under 4.30% just after 7 a.m. Sydney time on Friday, resulting in a loss of 7 points. That was the 9th drop in the last 11 sessions.

On Comex, August gold fell nearly $40 at one stage before settling down 1.5% at $2,319.50, the lowest since late April.

July silver hit a five-week low and was last down 4% at $29.025.

Comex copper saw a nearly 2% slide to $4.48 a pound, also a seven-week low.

In Singapore, however, the SGX iron ore price rose 2.1% to $106.81.

US and global oil prices were weaker. West Texas Intermediate fell 0.7% to $78.93 a barrel, while Brent also dropped 0.7% to settle at $82.12 a barrel.

May US producer prices (PPI) were down 0.2% month-on-month, versus market expectations for a rise of 0.1%, and compared to the April report's rise of 0.5%.

Core PPI in May (excluding food and energy) came in unchanged versus an expected rise of 0.3% month-on-month, and compared to a rise of 0.5% in the April report.

The tame 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 post-meeting statement from the Fed and comments from Fed Chair Jay Powell.

He made it clear that there would be no rate cut until the central bank could see inflation easing sustainably. However, he did say that there was no push for a rate rise!

In other news, initial claims for unemployment insurance jumped to 242,000 for the week ended June 8. That's the highest level since August 2023. This came after 272,000 new jobs were created in May.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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