Gold dips ahead of this week’s economic data

Gold dips ahead of this week's economic data

Gold dips a bit from Friday’s spike inspired by the cooler-than-expected U.S. jobs report. The bullion takes a pause ahead of this week’s economic data as the dollar and treasury yields strengthen.

The weaker labor market sparked hopes that the Federal Reserve will back off from pursuing an aggressive monetary policy to rein in soaring inflation. That sent the dollar and Treasury yields lower, bolstering gold prices. 

Fed policymakers have said they closely track reports on both the labor market and inflation, though most investors still expect another rate hike next month. Higher interest rates are typically bearish for gold, making the yellow metal less attractive to investors than other assets. 

August gold futures rose 0.2% last week to settle at $1,932.50 an ounce on Comex after the front-month contract rallied 0.9% Friday. 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 August contract is currently down $6.00 (-0.31%) an ounce to $1026.50 and the DG spot price is $1925.20.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, slipped 0.3% Friday, Reuters reported. Meanwhile, speculators raised long positions on Comex gold in the week ended July 3, according to the weekly Commitments of Traders report released Friday by the Commodity Futures Trading Commission. 

The U.S. added just 209,000 jobs last month, according to data released Friday by the Bureau of Labor Statistics. The figure was below both economists’ expectations of 225,000 and the May print of 306,000. Unemployment was little changed at 3.6%. The monthly jobs report is one of the last pieces of key data that the Fed will have in hand before the late-July policy meeting. 

The June consumer price index report comes out Wednesday and will provide the latest snapshot on inflation. Economists are forecasting the CPI climbed 3.1% from a year earlier, the smallest increase since March 2021. The Fed’s favorite inflation measure, the personal consumption expenditure price index, released last Friday, showed that U.S. inflation cooled in May. 

The Fed held rates unchanged last month for the first time after 10 consecutive increases. The Fed left its benchmark federal funds rate at 5.00% to 5.25% last month.

About 92.4% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at its July monetary policy meeting, while 7.6% expect it to keep rates unchanged. The Fed has 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 gained 1.2% last week to $23.29 an ounce on Comex after the most-active contract increased 1.7% Friday. 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 contract is currently down $0.079 (-0.34%) an ounce to $23.210 and the DG spot price is $23.07.

Spot palladium rose 1.6% last week to $1,271.50 an ounce after rallying 0.5% Friday. 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. The DG spot price is currently down $42.10 an ounce to $1228.00

Spot platinum advanced 1.1% last week to $921.40 an ounce on Friday’s 1.1% gain. 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 current DG spot price is up $5.70 an ounce to $926.80.

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