Gold drifts a tad lower Wednesday despite this morning’s inflation report that reflects the continuing easing of that economic dynamic, which may influence next week’s Federal Reserve’s monetary policy decision.
The consumer price index increased 0.2% for August, in line with the Dow Jones consensus, the Bureau of Labor Statistics reported. That’s its lowest point since February 2021. That put the 12-month inflation rate at 2.5%, down 0.4 percentage point from the July level, slightly below the estimate for 2.6% and at its lowest level in 3½ years.
August inflation data measured by the U.S. consumer price index and producer price index are due out Wednesday and Thursday. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came in in line with expectations the prior week with July data. The inflation report may influence the size of the Fed’s long-expected interest rate cut.
Traders were also parsing the effects of the policies outlined Tuesday night in the U.S. presidential debate between former President Donald Trump and current Vice President Kamala Harris.
Front-month gold futures rose 0.4% Tuesday to settle at $2,543.10 an ounce on Comex. The most-active December contract gained 0.6% in the first two days of the week. Bullion gained 2.2% in August after increasing 5.7% in July, its biggest monthly gain since March. Gold fell 0.3% in June. The metal rose 13% in 2023. The December contract is currently down $5.60 (-0.22%) an ounce to $2537.50 and the DG spot price is $2506.50.
U.S. nonfarm payrolls missed estimates for last month, though the unemployment rate slipped slightly in data released last week. The Fed closely looks at both labor market and inflation data when crafting monetary policy. Rate cuts are considered bullish for gold because they make it a more attractive investment than some other assets.
Investors tracked by the CME FedWatch Tool unanimously expect the Fed to begin interest rate cuts at the central bank’s next policy meeting ending Sept. 18. About 85% expect a 25 basis point cut, while the rest anticipate a 50 basis point cut. The Fed has kept interest rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Front-month silver futures fell 0.1% Tuesday to $28.61 an ounce on Comex, and the December contract declined 1.8% so far this week. Silver gained 0.7% last month after dropping 2.1% in July and falling 2.9% in June. It ticked up 0.2% in 2023. The December contract is currently up $0.231 (+0.81%) an ounce to $28.845 and the DG spot price is $28.29.
Spot palladium increased 1.9% Tuesday to $976.50 an ounce. It fell 0.3% in the first two days of the week. Palladium increased 3.2% last month after decreasing 4.3% in July and gaining 8.1% in June. Palladium plummeted 38% last year. The DG spot price is currently up $30.20 an ounce to $1005.00.
Spot platinum dropped 0.4% Tuesday to $947.00 an ounce. It rallied 1.7% in the first two days of the week. Platinum slid 5.2% in August after losing 2.1% in July and falling 3.7% in June. Platinum dropped 6.8% in 2023. The current DG spot price is down $3.70 an ounce to $945.50.
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