Gold aiming for its fourth weekly advance, as a weaker dollar lifts spot gold back near $1,800 an ounce.
Front-month gold futures fell 0.4% Thursday to settle at $1,807.20 an ounce on Comex, and the December contract increased 0.9% in the first four days of the week. Bullion dropped 1.4% in July after falling 2.2% in June and 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. The December contract is currently up $3.30 (+0.18%) an ounce to $1810.50 and the DG spot price is $1797.30.
The key consumer price index report this week provided one of the first indications that 40-year highs in inflation may have peaked. That tempered speculation of another 75-basis-point rate increase by the Federal Reserve next month. The Fed raised rates by 75 basis points in June and July. Some investors were betting on another big move after the release of the June personal consumption expenditures index at the end of July.
San Francisco Fed President Mary Daly told Bloomberg on Thursday that the inflation report may make it more appropriate to increase rates by 50 basis points next month. “It really behooves us to stay data dependent and not call it,” she said.
Investors are now betting there’s a 64.5% chance of a 50-basis-point rate hike in September, with just 35.5% projecting a 75-basis-point increase, according to the CME FedWatch Tool. A week ago, 68% of investors anticipated a 75-basis-point hike, with just 32% predicting a 50-point one.
Higher interest rates are bearish for gold, so signs that inflation is declining may cause the yellow metal to rally.
The CPI was unchanged in July, compared with a 1.3% increase in June, according to Labor Department data released Wednesday. The rate of inflation in the 12 months to July slipped to 8.5% from a 41-year high of 9.1% in June.
Meanwhile, the producer price index unexpectedly fell 0.5% in July, the first decline in two years, according to a separate report from the Bureau of Labor Statistics on Thursday. Economists had been expecting a 0.2% increase.
Tensions between the U.S. and China over Taiwan, the ongoing pandemic and the war in Ukraine have also caused uncertainty that has been bullish for the precious metal.
September silver futures dropped 1.9% Thursday to settle at $20.35 an ounce on Comex, though the front-month contract increased 2.6% in the first four days of the week. Silver slipped 0.8% in July after declining 6.2% in June and falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is currently up $0.016 (+0.08%) an ounce to $20.365 and the DG spot price is $20.56.
Spot palladium increased 1.5% Thursday to $2,308.00 and rallied 6.9% in the first four days of the week. Palladium rose 9.9% in July after losing 2.9% in June and 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price is down $7.40 an ounce to $959.80.
Spot platinum gained 1.2% Thursday to $966.30 an ounce, and it’s up 3% so far this week. Platinum retreated 0.3% in July after losing 7.2% in June. It dropped 9.4% last year. The DG spot price is currently down $32.40 an ounce to $2276.50.
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