Gold boosts on key economic data 

Gold boosts on key economic data

Gold boosts on this morning’s key economic data on employment and the GDP that reflects a slowing economy.

The August ADP employment report came out Wednesday. The firm reported that private employers added 177,000 jobs in August, missing the forecasted 200,000 jobs and well below the revised total of 371,000 added in July. ADP also reported that pay growth slowed in August.

The Commerce Department’s second read on second-quarter GDP was also out this morning. The GDP was revised lower to a still-solid pace in the second quarter. In its second estimate of GDP for the April-June period, the government says the gross domestic product increased at a 2.1% annualized rate last quarter, revised down from the 2.4% pace reported last month. Economists polled by Reuters had expected an unrevised GDP.

The Fed’s favorite inflation measure, the personal consumption expenditures price index, comes out Thursday with July data. Weekly U.S. initial jobless claims for last week also come out Thursday followed by the key U.S. monthly jobs report for August on Friday.  

The Federal Reserve pays close attention to both inflation and inflation conditions when crafting monetary policy, so the reports will be parsed for indicators on whether the Fed will continue with its cycle of interest rate increases to combat inflation. Higher interest rates are typically bearish for gold, so an end or a pause to rate hikes would give precious metals a boost. The Fed has raised rates by 5.25 percentage points since March 2022.

Front-month gold futures rose 0.9% Tuesday to settle at $1,965.10 an ounce on Comex, and the December contract gained 1.3% in the first two days of the week. Bullion is down 2.2% in August after rising 4.1% in July and losing 2.7% in June. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022.  The December contract is currently up $8.0 (+0.41%) an ounce to $1973.10 and the DG spot price is $1948.50.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.3% Tuesday to 889.23 metric tons, Reuters reported. 

About 90.5% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in September at 5.25% to 5.50%. Just 9.5% expect it to raise rates another 25 basis points. 

Economic reports out Tuesday showed that the number of jobs available in the U.S. shrank for a third consecutive month in July to the lowest level in almost two and a half years. The JOLTS report from the Labor Department provided the latest signal that the labor market is tightening. 

Separately, a survey released by the Conference Board showed that consumers’ perceptions of the labor market cooled in August, though labor conditions remained tight. 

The economic news will be digested alongside comments from Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde last week that interest rates should remain high. 

Front-month silver futures added 2.2% Tuesday to settle at $25.14 an ounce on Comex, and the December contract advanced 2.3% in the first two days of the week. Silver is up 0.7% this month after gaining 8.5% in July and dropping 2.4% in June. It retreated 4.2% in the first half of the year after rising 3% in 2022.   The December contract is currently up $0.241 (+0.96%) an ounce to $25.380 and the DG spot price is $25.05.

Spot palladium decreased 0.3% Tuesday to $1,271.50 an ounce, though it gained 2.5% in the first two days of the week. Palladium is down 2% this month after rising 3.6% in July and falling 9.5% in June. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. The current DG spot price is down $17.20 an ounce to $1248.00.

Spot platinum rose 1.4% Tuesday to $988.10 an ounce and is up 3.9% so far this week. Platinum is up 3.1% this month after gaining 5.2% in July and falling 9.3% in June. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently down $5.10 an ounce to $981.00.

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