This update corrects the spelling of the name of GoldCore’s CEO Stephen Flood.

Gold futures recovered early losses Thursday to stretch their streak of gains to a third session in a row, settling at a nearly one-month high.

Investors looked to the latest U.S. economic data and Federal Reserve Chairman Jerome Powell’s congressional testimony to help gauge the next direction for the metal’s prices, but appeared to find little reason to make any big moves.

August gold 
GCQ21,
+0.22%

GC00,
+0.22%

edged up by $4, or 0.2%, to settle at $1,829 an ounce, marking another finish at the highest since June 16, based on the most-active contract. Prices posted a gain for third-straight session.

Silver futures for September delivery
SIU21,
+0.38%

SI00,
+0.38%

added 12 cents, or 0.5%, at $26.39 an ounce.

Powell, in front of the House Financial Services Committee on Wednesday, said that removing some of the Fed’s stimulus was some way off as the labor market struggles to rebound from the pandemic.

The central bank chief also described inflation as a short-lived phenomenon that would eventually revert to the mean after a COVID-fueled surge that has been stoked by supply shortages amid spiking demand. His testimony before the Senate Banking committee on Thursday offered a similar message.

“Remember that the precious metal is highly sensitive to a change in interest rates as a hike would mean a rise in opportunity cost for holding the non-interest bearing asset,” said Naeem Aslam, chief market analyst at AvaTrade, in a market update. Powell “extinguished fears of revising the interest rates in the short term.” 

Economic reports offered a mixed picture of the U.S. recovery from the COVID pandemic on Thursday.

U.S. initial jobless benefit claims fell to 360,000 from 386,000 in the week ended July 10. The U.S. import price index climbed 1% in June, and prices minus volatile fuel rose 0.7% on the month. Meanwhile, the Philadelphia Manufacturing Index fell to 21.9 from 30.7, while the Empire State manufacturing index rose to a record 43 in July from 17.4 in the prior month.

“Even with consumer price inflation increasing, government bond yields have backed away from highs set earlier in the year and real interest rates have declined,” said Stephen Flood, chief executive officer at GoldCore, in Thursday commentary. “We expect that trend to continue as markets realize that even with higher inflation…central banks are going to be very slow to raise interest rates because of excessive government debt levels.”

Flood said that does not mean that the Fed won’t start tapering assets in the third quarter, “but it is likely that the Fed, and other central banks, such as the ECB, will remain behind the inflation curve.”

Prices for both gold and silver trade higher for the week so far.

It’s “difficult to determine the primary bullish force serving to lift gold and silver prices this week, but we suspect that persistent resiliency in U.S. Treasury bond prices [lower Treasury yields] are at the top of the list,” analysts at brokerage Zaner wrote in a daily report.

It is also possible that uncertainty on the economy, given disappointing U.S. data and increasing infections of the delta variant of COVID, has been providing a measure of “flight to quality buying interest,” they said.

On Comex Thursday, September copper
HGU21,
+0.90%

tacked on 1.3% to $4.32 a pound. October platinum
PLV21,
+0.59%

added nearly 0.9% to $1,137.70 an ounce, but September palladium
PAU21,
-3.50%

shed 3.4% to $2,729.30 an ounce.

Analysts at Zaner pointed out that there was a “large outflow” from palladium exchange-traded funds on Wednesday of 9,964 ounces, which brings down the year-to-date gain to 8.7%.

The “bull camp should be discouraged with the palladium market’s inability to hold in positive territory” on Wednesday in the wake of the rise in gold, weakness in the U.S. dollar and “what the market is suggesting was a dovish” Powell testimony to Congress, the Zaner analysts said.

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