Gold climbs back over one-week high, after losing ground in the early hours of Wednesday trading on a stronger dollar. Gold came back on bargain buying, supported by the apparent escalation in the conflict between Russia and Ukraine which is triggering some haven demand.
Yesterday, buyers turned to the yellow metal as a hedge against geopolitical uncertainty after reports that U.S. President Joe Biden agreed to give Ukraine anti-personnel land mines in an apparent attempt to slow Russian troops advancing on the eastern part of Ukraine. The move came after the Biden administration granted Ukraine permission to use Army Tactical Missile Systems to strike targets inside Russia.
Front-month gold futures rose 0.6% Tuesday to settle at $2,631.00 an ounce on Comex and the most-active December contract rallied 2.4% in the first two days of the week. Bullion rose 3.4% in October after gaining 5.2% in September and advancing 2.2% in August. The metal is up 27% in 2024. The December contract is currently up $17.20 (+0.65%) an ounce to $2648.20 and the DG spot price is $2646.40.
In addition to the dollar and geopolitical turmoil, investors are closely watching President-elect Donald Trump’s announcements about key staff positions for signs of future policy. Investors are also looking for signals on the Federal Reserve’s next moves in shaping monetary policy, particularly because of the risk of a resurgence in inflation Trump’s proposed tariffs and tax cuts. The Fed has been widely expected to continue interest rate cuts into 2025 as inflation has slowed to near target levels.
Goldman Sachs forecast in a report earlier this week that gold will rally to $3,000 by December 2025, a new record, on central bank buying and interest rate cuts.
More than 55% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by another 25 basis points in December, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged next month. But the percentage of those expecting the Fed to keep rates unchanged has doubled in the past week.
A halt or delay in interest rates would be bearish for gold, which typically gets a boost from lower interest rates. Last week, two key measures of inflation, the consumer price index and the producer price index, came in this week in line with estimates for October. The Fed cut interest rates by a total of 75 basis points in September and November to 4.50% to 4.75%.
Before the Fed’s recent cuts, the central bank had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022. The Fed began raising rates during the pandemic to combat surging inflation.
In upcoming economic news, University of Michigan consumer sentiment data comes out Friday.
Front-month silver futures edged up 0.1% Tuesday to $31.26 an ounce on Comex, and the December contract increased 2.7% in the first two days of the week. Silver advanced 4.3% in October after rallying 7.9% in September and gaining 0.7% in August. It’s up 30% in 2024. The December contract is currently down $0.027 (-0.09%) an ounce to $31.235 and the DG spot price is $31.23.
Spot palladium rose 2.6% Tuesday to $1,051.00 an ounce, and it’s up 8.9% so far this week. Palladium increased 11% in October after gaining 3.2% in September and rising 3.2% in August. Palladium is down 5.9% this year. Currently, the DG spot price is down $10.30 an ounce to $1037.00.
Spot platinum gained 0.4% Tuesday to $979.50 an ounce, and it rose 3.3% so far this week. Platinum rose 1.5% in October after increasing 5.6% in September and sliding 5.2% in August. Platinum is down 1.8% this year. The DG spot price is currently down $7.00 an ounce to $972.60.
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