Gold dips on inflation report

Gold dips on inflation report

Gold dips on this morning’s inflation report as rate hike next week seems more likely. However, the bullion is headed for a weekly and monthly gain, as a weaker dollar and economic concerns spurred haven investors.

Inflation rose once again in March, per the data released this morning. Despite a year’s worth of interest rate increases, the personal consumption expenditures (PCE) price index excluding food and energy increased 0.3% for the month, meeting Dow Jones estimates, while the annual data, so-called core PCE increased 4.6%, slightly higher than the expected 4.5%. This is the Fed’s favorite inflation measure and is the last key economic indicator before Fed policymakers’ meeting next week, when they are widely expected to announce another 25 basis point interest rate increase to curb inflation. Consumer sentiment data for April is also due out Friday.

June gold futures rose 0.2% Thursday to settle at $1,999.00 an ounce on Comex, as the front-month contract increased 0.4% in the first four days of the week. Bullion is up 0.6% this month after gaining 8.1% in March. The metal fell $2.40 in 2022.  Currently, the June contract is down $1.4 (-0.07%) an ounce to $1997.60 and the DG spot price is $1985.10.

Economic growth slowed more than expected in the first quarter, data released Thursday showed. U.S. GDP rose at a 1.1% annual rate last quarter, according to preliminary data from the Commerce Department. That’s slower than the 2.6% rate in the fourth quarter of 2022 but still a third straight quarter of growth.

Weekly initial jobless claims for last week dropped 16,000 to 230,000, data from the Labor Department showed, while pending home sales unexpectedly slumped in March.

About 90% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at the central bank’s next policy meeting, while just 10% anticipate the central bank will leave rates unchanged. Fed policymakers have said they track both inflation and labor market statistics when determining monetary policy. 

The Fed has raised rates by 25 basis points twice this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. The federal funds rate is currently at 4.75% to 5.00%. 

July silver futures rose 0.6% Thursday to settle at $25.21 an ounce on Comex, and the front-month contract retreated 0.3% in the first four days of the week. Silver is up 4.4% in April after increasing 15% in March. It rose 3% in 2022. The July contract is currently up $0.026 (+0.10%) an ounce to $25.235 and the DG spot price is $24.91.

Spot palladium decreased 1.5% Thursday to $1,519.00 an ounce. It’s down 6.4% so far this week. Palladium is up 1.7% this month after rising 3.7% in March. Palladium lost 5.7% in 2022. Currently, the DG spot price is up $17.60 an ounce to $1535.00.

Spot platinum dropped 0.8% Thursday to $1,089.10 an ounce, though it’s down 3.9% so far this week. Platinum added 8.9% this month after increasing 3.7% in March. Platinum surged 10% in 2022. The DG spot price is currently down $10.30 an ounce to $1077.90.

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