Gold prices lost some ground on Friday as the dollar rebounded after positive weekly U.S. jobs data. The dollar index spiked as an unexpected fall in U.S. weekly jobless claims boosted bets that the Fed would keep interest rates higher for longer. The yellow metal had hit its highest point in two months on Thursday.
Comments from former Fed Chair Ben Bernanke on Thursday added to speculation that the Fed would stop the rate hikes after raising interest rates another 25 basis points July 26. The Fed held rates unchanged last month for the first time after 10 consecutive increases. Lower interest rates – or a pause in interest rates hikes – would be considered bullish for gold because the metal is less attractive to investors when rates go up.
“It looks very clear that the Fed will raise another 25 basis points at its next meeting,” Bernanke said during a Fidelity Investments webinar Thursday. “It’s possible this increase in July might be the last one.”
December gold futures fell 0.5% Thursday to settle at $2,009.80 an ounce on Comex. The front-month contract, which rolled to December from August this week, was up 2.3% in the first four days of the week. Bullion dropped 2.7% last month after retreating 0.9% in May and increasing 0.6% in April. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. The December contract is currently down $8.90 (-0.44%) an ounce to $2000.90.
The latest economic reports added fuel to the rate pause speculation. The index of U.S. leading economic indicators fell for a 15th month in June, signaling that a recession may be starting. Construction of new homes fell 8% last month, a separate report showed Wednesday. But the U.S. labor market remained resilient, with weekly initial jobless claims falling last week, according to data released Thursday.
Last week, the U.S. consumer price index data for June indicated that the economy shifted into disinflation. U.S. wholesale prices also rose less than expected in June, according to a separate report from the Labor Department.
These reports are all seen as signals that the Fed may be anticipating a pause or end to its rate hikes.
About 99.8% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise its federal funds rate by 25 basis points to 5.25% to 5.50% at its July monetary policy meeting. Just 0.2% expect it to keep rates unchanged. But the vast majority of investors tracked by the tool are betting that it will be at that rate for the rest of the year, following meetings in September, November and December.
The Fed increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022.
September silver futures fell 1.7% Thursday to settle at $24.96 an ounce on Comex. The most-active contract slid 0.9% in the first four days of the week. Silver dropped 2.4% in June after decreasing 6.5% in May and gaining 4.4% in April. It retreated 4.2% in the first half of the year after rising 3% in 2022. The September currently down $0.042 (-0.17%) an ounce to $24.920 and the DG spot price is $24.79.
Spot palladium decreased 2.2% Thursday to $1,302.00 an ounce, though it’s up 0.3% so far this week. Palladium fell 9.5% in June after tumbling 9.3% in May and rising 2% in April. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. Currently, the DG spot price is up $4.20 an ounce to $1304.50.
Spot platinum retreated 1.7% Thursday to $963.50 an ounce and has dropped 1.5% this week. Platinum fell 9.3% in June after retreating 7.4% in May and adding 8.5% in April. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently up $1.20 an ounce to $963.80.
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