Gold drops in Wednesday morning trading on dollar’s appeal as anticipation of continued aggressive monetary policy pressured the yellow metal, even as delegates at the London Bullion Market Association’s annual precious metals conference predicted prices would rise over the next year.
Investors are anticipating another large rate hike by Federal Reserve in early November to combat the highest inflation in more than 40 years. The market is awaiting the release of the Beige Book – the report on the state of the economy from the Fed’s 12 regional banks – and housing starts data Wednesday for further direction.
Front-month gold futures tumbled 0.5% Tuesday to settle at $1,655.80 an ounce on Comex. The December contract gained 0.4% in the first two days of the week. Bullion fell 3.1% in September and 7.5% in the third quarter. The metal is down 9.5% this year.
Gold will likely rise to $1,830.50 an ounce in a year, delegates at the LBMA annual precious metals conference in Lisbon predicted, according to a Reuters report Tuesday. They put silver prices at $28.30, platinum at $1,238.70, and palladium at $2,058.80.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.29 metric tons Tuesday, Reuters reported.
Minneapolis Fed President Neel Kashkari said Tuesday that the central bank can’t pause its rate tightening measures when it reaches the discussed target of 4.5% to 4.75% if “underlying” inflation is still increasing.
“If we don’t see progress in underlying inflation or core inflation, I don’t see why I would advocate stopping at 4.5 or 4.75, or something like that,” he said at a panel discussion hosted by the Women Corporate Directors Minnesota Chapter.
The consumer price index surged 8.2% in September from a year earlier, according to a report released last week. So-called core CPI, the index excluding food and energy costs, increased 6.6% from a year earlier to the highest level since 1982, while it climbed 0.6% for a second month.
The figures make it more likely that the Fed will impose another 75 basis point interest rate increase at the policymakers’ next meeting in early November. The Fed has raised interest rates by 300 basis points so far this year, with 75 basis points increases each in June, July, and September. There are two more meetings left this calendar year.
Investors are now betting there’s a 93.5% chance of a 75-basis-point rate increase at the next meeting of Fed policymakers in early November, with the remaining 6.5% projecting a 50-basis-point hike, according to the CME FedWatch Tool. A month ago, just 59.7% of investors anticipated a 75-basis-point increase, with 30.7% predicting a 50-basis-point hike and the rest a 100-basis-point increase.
Front-month silver futures fell 0.6% Tuesday to settle at $18.60 an ounce on Comex. The December contract increased 2.9% in the first two days of the week. Silver advanced 6.5% in September and fell 6.5% in the third quarter. It’s down 20% this year. The December contract is currently down $0.215 (-1.16%) an ounce to $18.385 and the DG spot price is $18.53.
Spot palladium gained 0.7% Tuesday to $2,042.50 an ounce and is up 0.9% this week. Palladium rose 5.9% last month and 13% in the third quarter. It’s up 6.7% in 2022. Currently, the DG spot price is down $12.90 to $2026.00.
Spot platinum lost 1% Tuesday to $917.50 an ounce, but is up 1.2% so far this week. Platinum rose 2.6% in September. It fell 4% in the third quarter and is down 5.7% this year. The DG spot price is down $13.70 an ounce to $901.80.
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