Gold drops from $1800 an ounce on stronger dollar and some profit-taking as investors awaited U.S. inflation data and a Federal Reserve rate decision in the next few days.
The November consumer price index will be released on Tuesday, and Fed policymakers meet Tuesday and Wednesday, with the rate decision due on Wednesday.
The Fed has raised rates by 375 basis points this calendar year to tame 40-year highs in inflation. The rate hikes were 75 basis points each in June, July, September and November. Investors tracked by the CME FedWatch Tool are betting there’s a 74.7% chance the Fed will raise interest rates by 50 basis points in December and 25.3% odds of another 75-basis-point hike.
Front-month gold futures rose $1.10 last week to settle at $1,810.70 an ounce on Comex, after the February contract gained 0.5% Friday. Bullion increased 7.3% in November, its first monthly rally since March. The metal is down 1% this year. The February contract is currently down $10.0 (-0.55%) an ounce to $1800.70 and he DG spot price is $1790.20.
The U.S. producer price index, released Friday, showed wholesale prices rose 0.3% in November and 7.4% from a year earlier, dashing hopes that inflation is cooling. The CPI report due Tuesday will be the last inflation indicator the Fed gets before its rate decision Wednesday.
The Fed closely watches reports on inflation and the U.S. labor market when it makes monetary policy decisions because it’s using a series of interest rate hikes to curb inflation. High interest rates are typically bearish for gold, though the yellow metal has traditionally served as a hedge against inflation.
In addition to the Fed, the European Central Bank has a rate decision scheduled for Thursday. It’s also forecast to deliver a 50 basis point hike. A decision is also due this week from the Bank of England.
Front-month silver futures rose 2% last week to settle at $23.72 an ounce on Comex after a 2% rally in the March contract on Friday. Silver increased 14% in November, its biggest monthly gain since December 2020. It’s up 1.6% this year. The March contract is currently down $0.152 (-0.64%) an ounce to $23.565 and the DG spot price is $23.36.
Spot palladium gained 3% last week to $1,982.00 an ounce after rising 1.6% Friday. Palladium rose 0.3% last month after declining 15% in October. It’s up 3.5% in 2022. Currently, the DG spot price is down $59.80 an ounce to $1924.00.
Spot platinum increased 0.6% last week to $1,032.00 an ounce, and it advanced 1.4% Friday. Platinum gained 11% in November, its best month since February 2021. It’s up 6.1% this year. The DG spot price is currently down $30.90 an ounce to $1004.30.
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