Gold Aims for Best Quarter Since 2020

Gold Aims for Best Quarter Since 2020

Gold aims for its best quarter since June 2020 amid light trading before the New Year’s holiday.

Investors were heading into 2023 with some of the same concerns that they’ve had for most of 2022 – high inflation, the state of the economy, and what the Federal Reserve will do next about both. 

Economic releases are light before the New Year, though weekly initial jobless claims for last week came out Thursday and showed another tick up, but one in line with economists’ estimates.

Front-month gold futures rose 0.6% Thursday to settle at $1,826.00 an ounce on Comex. The February contract has advanced 1.2% so far this week. U.S. financial markets were closed Monday in observance of the Christmas holiday, which fell on a Sunday this year. Bullion is up 3.8% this month after increasing 7.3% in November, its first monthly rally since March. The metal is down 0.1% in 2022. The February contract is up $4.70 (+0.26%) an ounce to $1830.70 and the DG spot price is $1822.30.

Gold came under pressure for most of the year amid 40-year highs in inflation and the Fed’s response to the high cost of goods and services. The central bank boosted interest rates by 425 basis points this calendar year, most recently raising rates by 50 basis points in December to 4.25% to 4.5%, the highest level in 15 years. High interest rates are typically bearish for the yellow metal. 

But the December rate increase was a slowdown in the pace of interest rate hikes, and that gave gold some room to rally. The Fed raised rates by 75 basis points each in June, July, September and November. The central bank has indicated that it will maintain its aggressive monetary policy into 2023 despite some investors’ fears of a recession. 

Minutes of the last Fed meeting are due out next week – on Jan. 4 – and are likely to provide further insight into the central bank’s future actions. Next week also brings key manufacturing reports from all major economies and the closely watched monthly U.S. jobs report for December on Friday, Jan. 6.

Investors tracked by the CME FedWatch Tool are betting there’s a 72.8% chance the Fed will boost interest rates by just 25 basis points at policymakers’ next meeting Feb. 1. The odds are 27.2% in favor of another 50 basis point hike. A month ago, 42.4% of investors were anticipating a 25 basis point increase, with 46.9% at 50 basis points and 10.7% at 75. 

Front-month silver futures rallied 1.7% Thursday to settle at $24.25 an ounce on Comex. The March contract gained 1.4% so far this week. Silver is up 11% this month after increasing 14% in November, its biggest monthly gain since December 2020. It’s up 3.9% this year. The March contract is currently up $0.030 (+0.12%) an ounce to $24.280 and the DG spot price is $23.97.

Spot palladium increased 1.3% Thursday to $1,832.00 an ounce and has risen 3.6% this week. Palladium is down 2.6% in December after gaining 0.3% last month. It’s down 4.3% in 2022. The current DG spot price is down $23.90 an ounce to $1809.50.

Spot platinum rallied 4.1% Thursday to $1,062.50 an ounce and is up 3.3% this week. Platinum is up 2.7% this month after rising 11% in November, its best month since February 2021. It’s up 9.2% this year. Currently, the DG spot price is up $20.00 an ounce to $1077.00.

Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.