- The greenback extended its gains, pushing precious metals lower.
- India’s January gold imports fell 76% from a year earlier.
- Peruvian miner Buenaventura resumed activities at its gold and silver Julcani mine.
The greenback continued its bullish momentum on Thursday, resulting in bearish price action for commodities. Precious metals hit new lows after Cleveland Fed President Mester presented a compelling argument for 50 bps at the last meeting, and PPI data came in higher than expected.
Initial jobless claims data in the US fell last week, revealing a strong labor market, and the US producer price index rebounded to 0.7%, above the consensus projection of 0.4%.
Following the data release, benchmark 10-year Treasury yields increased to levels not seen in over a month. The dollar strengthened further to a six-week high, making precious metals priced in dollars more expensive for holders of other currencies.
Although inflation seems to be declining, it is doing so too slowly, raising the possibility that rates will need to stay higher for longer, which is not good for precious metals. The US Federal Reserve anticipates raising interest rates by 25 basis points twice more in March and May.
The opportunity cost of owning zero-yield metals increases when US interest rates and bond yields rise.
According to a government source, India’s January gold imports fell 76% from a year earlier to a 32-month low due to weak demand after domestic prices surged to record highs and as jewelers delayed purchases in the hope of a drop in import duty.
Reduced imports by the second-largest user of bullion globally may have an impact on benchmark gold prices.
In January, the nation imported 11 tonnes of gold, down from 45 tonnes the previous month.
According to a Mumbai-based trader with a private bullion importing bank, local gold futures spiked to a new high of 57,270 rupees per 10 kilos in January. This suppressed retail demand.
After a nearly 10-day pause, Peruvian miner Buenaventura said Thursday that activities at its gold and silver Julcani mine have resumed. The company acknowledged the “support” of neighboring communities.
The reopening of one of Peru’s biggest mines came a day after Machu Pichu reopened to tourists. Both were compelled to temporarily close due to the violent demonstrations in the Andean nation after Pedro Castillo’s removal as president.