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Metal Market Mixed After US Dollar Drops

February 18, 2021 at 18:25 by Vladimir Vyun

The metal market demonstrated mixed performance today. While gold, platinum, and copper rallied, silver and palladium dropped. That is a significant shift in the trend demonstrated earlier this week when most metals were rising but gold was weak.

Market analysts were puzzled by the recent underperformance of gold. The outlook for global economic recovery and the push for the $1.9 trillion coronavirus relief package in the United States boosted inflation expectations. That should have been beneficial to the yellow metal, which is traditionally used as a hedge against inflation. But it seems that gold has decoupled from inflationary trade in the past several months, not reacting to inflation expectations.

So why gold fared today better than previously? The most obvious reason for that is the falling US dollar. The greenback weakened after US jobless claims jumped from 848,000 to 861,000 unexpectedly last week. That is instead of the expected drop to 775,000.

In the long term, though, today’s gain (which was rather mild anyway) does not change anything. Fundamentals, which were driving bullion lower, remained unchanged, and it is hard to see what factors could boost the metal significantly. That does not mean such factors cannot exist, though.

Futures for delivery of gold in April rose by $0.3 (0.02%) to $1,774.7 per troy ounce as of 18:22 GMT on COMEX today. March contract for silver dropped by $0.24 (0.88%) to $27.08 per ounce. Spot price for platinum rose by $11.63 (0.93%) to $1,266.62 per ounce, whereas palladium fell by $15.25 (0.64%) to $2,358.09 per ounce. Copper for delivery in May jumped as much as $0.085 (2.22%) to $3.9105 per pound.

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