Gold drops $20 an ounce on profit-taking after front-month futures settled at a 32-month high on Thursday. The yellow metal shrugged off disappointing retail numbers.
U.S. retail sales slipped more than anticipated in March according to government data, extending a downward trend that signals a cooling economy. Retail sales dropped by one percent in March from a month prior per the Commerce Department. Additionally, February’s contraction was revised to a smaller 0.2 percent. Investors now await this morning’s consumer sentiment report for April.
Futures were heading for a second consecutive weekly gain as recent inflation and other economic data added to speculation that the Federal Reserve may be approaching the end of its series of interest rate increases. A weaker dollar also supported the precious metal as the dollar index slipped to a one-year low.
June gold futures rallied 1.5% Thursday to settle at $2,055.30 an ounce on Comex, the highest level since August 2020, while the front-month contract increased 1.4% in the first four days of the week. Bullion gained 8.1% last month after decreasing 5.6% in February, its worst performance since June 2021. Gold increased 8.8% in the first quarter. The metal fell $2.40 in 2022. The June contract is currently down $20.9 (-1.02%) an ounce to $2034.40 and the DG spot price is $2024.60.
Consumer price index data released Wednesday showed that annual inflation fell for a ninth consecutive month in March, to 5% from 6% in February, and reaching the lowest rate since May 2021. The data continued to show a month-on-month increase, but the rate slowed to 0.1% in March from 0.4% in February. The figures were below economists’ estimates of 5.2% for the year and 0.2% for the month.
Then data Thursday showed wholesale prices unexpectedly fell in March. The producer price index dropped 0.5% last month and was revised to steady in February, rather than down 0.1% Annual figures showed the smallest year-on-year increase since January 2021.
A strong jobs report for March, released last week, added to speculation that the Fed will again raise rates in May but may pause after that. A pause or peak in interest rate increases would be seen as bullish for gold, which becomes a more attractive alternate investment when rates go down.
Minutes of the last Fed policy meeting, released Wednesday, showed policymakers aren’t expecting to raise rates as high as they once did, though they’re still on track for a rate hike in May. The minutes also noted that Fed staff advised the decision makers that they were forecasting a “mild recession” later this year.
About 77.3% 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 in May, while 22.7% 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%.
Silver May futures gained 1.8% Thursday to settle at $25.93 an ounce on Comex. The metal advanced 3.3% in the first four days of the week. Silver increased 15% in March after retreating 12% in February. It edged up 0.5% in the first quarter. It rose 3% in 2022. The May contract is currently up $0.050 (+0.19%) an ounce to $25.975 and the DG spot price is $25.97.
Spot palladium increased 3.2% Thursday to $1,540.00 an ounce and is up 3.6% so far this week. Palladium rose 3.7% in March after plummeting 14% in February. It fell 17% last quarter. Palladium lost 5.7% in 2022. The DG spot price is down $5.10 an ounce to $1515.50.
Spot platinum gained 3.3% Thursday to $1,063.10 an ounce and has risen 4.4% so far this week. Platinum increased 3.7% last month after falling 5.9% in February. It dropped 6.6% in the first quarter. Platinum surged 10% in 2022. Currently, the DG spot price is down $7.70 an ounce to $1052.80.
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