Gold aims for its first weekly gain in six weeks as it edged up early Friday on a weaker dollar.
But the yellow metal remained under pressure amid speculation that the economy is resilient enough to tolerate another larger Federal Reserve rate increase. Applications for new U.S. unemployment benefits dropped for the third consecutive week last week, data released Thursday showed, indicating that the labor market remains tight.
Front-month gold futures slipped 0.3% Thursday to settle at $1,840.50 an ounce on Comex. The April contract advanced 1.3% in the first four days of the week. Bullion dropped 5.6% last month, its worst month since June 2021. It increased 6.5% in January and gained 3.8% in December. The metal fell $2.40 in 2022. The April contract is currently up $9.3 (+0.51%) an ounce to $1849.80 and the DG spot price is $1844.80.
U.S. initial jobless claims reached 190,000 for the week ended Feb. 25, compared with 192,000 the week before, data from the Labor Department showed Thursday. Claims have been under 200,000 for seven straight weeks.
The report, alongside rising inflation, is being read by some people in the market as an indicator that the Fed is likely to keep raising interest rates well above 5%, possibly well into the calendar year and by larger increments. Interest rate increases are considered bearish for gold because they make the metal less attractive as an alternate investment.
The report came on the heels of data Wednesday showing that U.S. manufacturing contracted in February for the fourth consecutive month following 28 months of expansion. But last week, data showed that the Federal Reserve’s favorite inflation measure, the U.S. personal consumption expenditures price index, unexpectedly accelerated in January.
While most investors tracked by the CME FedWatch Tool are still betting that the Fed will boost rates by another 25 basis points in March 16, more have been anticipating a larger hike. The tool shows 73.8% of investors expecting a 25-basis-point hike, with the remaining 26.2% betting on the Fed to raise rates by 50 basis points. A month ago, 82.7% of those tracked were expecting a 25 basis point increase.
The Fed raised rates by 25 basis points Feb. 1 to 4.50% to 4.75%. The move followed rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November.
Silver May futures decreased 0.9% Thursday to settle at $20.90 an ounce on Comex. The front-month contract slipped 0.2% in the first four days of the week. Silver retreated 12% last month after falling 0.9% in January and rising 10% in December. It advanced 3% in 2022. The May contract is up $0.184 (+0.88%) an ounce to $21.085, while the DG spot price is $21.00.
Spot palladium dropped $1.00 Thursday to $1,462.50 an ounce and is up 2.5% so far this week. Palladium plummeted 14% in February after dropping 7.5% in January and retreating 4% in December. It lost 5.7% in 2022. Currently, the DG spot price is off $6.40 an ounce to $1463.50.
Spot platinum gained 60 cents Thursday to $968.00 an ounce. It rose 5.5% the first four days of the week. Platinum retreated 5.9% in February after falling 4.3% in January and gaining 3.4% in December. It surged 10% in 2022. The current DG spot price is up $9.20 an ounce to $975.40.
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