Gold down on stronger dollar early Monday amid light holiday trading as investors eye the Fed’s meeting later this week.
Data released Friday showed that U.S. inflation cooled in May, while consumer spending stagnated, signaling that the economy may be losing steam. That kept a floor under prices of gold, which frequently attract haven investors during times of uncertainty.
August gold futures dropped 20 cents last week to settle at $1,929.40 an ounce on Comex, though the front-month contract gained 0.6% 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 slightly down $0.70 (-0.04%) an ounce to $1928.70 and the DG spot price is $1923.70.
Trading volumes are expected to be light this week because U.S. financial markets will be closed Tuesday for the Independence Day holiday. Comex futures will trade electronically in an abbreviated session, though they won’t settle until Wednesday.
The Federal Reserve’s favorite inflation measure, the personal consumption expenditure price index, released Friday, showed that so-called core PCE – the cost of goods excluding food and energy – rose 0.3% in May and 4.6% year on year. With the excluded items, the PCE index rose 3.8% year on year and 0.1% from the month earlier. Policymakers have said they closely watch data on inflation and the labor market when making monetary policy decisions.
Consumer spending rose just 0.1% for the month, below economists’ estimates of 0.2%.
Investors are awaiting the monthly U.S. employment report for June, which comes out Friday, for further indications on the strength of the economy and the Fed’s next moves on interest rates. The minutes of the last Fed policy meeting are set for release Wednesday and will also be closely read for signals on whether the central bank will resume its interest rate hikes.
The Fed left its benchmark federal funds rate at 5.00% to 5.25% last month, its first pause after 10 consecutive rate increases to combat inflation.
About 86.2% 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 13.8% 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 rose 2.1% last week to settle at $23.02 an ounce on Comex after the most-active contract rallied 1% 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 up $0.135 (+0.59%) an ounce to $23.155 and the DG spot price is $22.98.
Spot palladium decreased 4.1% last week to $1,252.00 an ounce after dropping 0.3% 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. Currently, the DG spot price is up $9.50 an ounce to $1256.50.
Spot platinum dropped 1.8% last week to $911.30 an ounce, though it rose 0.7% Friday. 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 $3.00 an ounce to $917.80.
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