Gold eases from a one-month high early Wednesday on profit taking and as the dollar and Treasury yields strengthened, taking a bit of shine off the yellow metal.
Traders held gold within a tight trading band ahead of Thursday’s release of the October U.S. consumer price index, which is likely to provide direction. The CPI is an indicator of the state of the economy and may point to the Federal Reserve’s likely next steps when it comes to raising interest rates. The Fed’s favorite inflation measure, the personal consumption expenditures price index, increased in September.
Front-month gold futures rose 2.1% Tuesday to settle at $1,716.00 an ounce on Comex. The December contract increased 2.4% in the first two days of the week. Bullion fell 1.9% in October, its seventh straight month of declines. The metal is down 6.2% this year. Currently, the December contract is down slightly by $2.7 (-0.16%) an ounce to $1713.00, while the DG spot price is up $.90 to $1715.40.
The CPI report is being closely watched because inflation is the driver behind the Fed’s 375 basis points in interest-rate increases this calendar year. The central bank raised interest rates by 75 basis points last week to 3.75% to 4%. The move followed increases of 75 basis points each in June, July, September and November.
Investors are betting there’s a 54.4% chance Fed policymakers will raise interest rates by 50 basis points in December, with the remaining 45.6% of investors tracked by the CME FedWatch Tool projecting a 75-basis-point hike.
Higher rates are typically bearish for gold, making it less attractive than other assets, such as the dollar, for investors.
In other economic news, investors are also awaiting Thursday’s release of the weekly initial jobless claims and a series of speeches over the next few days by Fed officials.
The unemployment rate rose to 3.7% last month from 3.5% in September, according to data released Friday by the Labor Department. But payrolls increased by 261,000 last month, better than the 205,000 estimated by economists before the report.
Additionally, investors are keeping an eye on U.S. midterm election results, which may not be known for days. If Congress flips, as many people are expecting, it will likely affect public policy and could influence market direction.
Front-month silver futures rose 2.8% Tuesday to settle at $21.50 an ounce on Comex. The December contract rallied 3.5% in the first two days of the week. Silver advanced 0.4% in October, its second consecutive monthly increase. It’s down 7.9% this year. The December contract is currently down $0.072 (-0.33%) an ounce to $21.430 and the DG spot price is $21.45.
Spot palladium gained 1.4% Tuesday to $1,950.00 an ounce and is up 4.1% so far this week. Palladium declined 15% last month. It’s up 1.8% in 2022. Currently, the DG spot price is down $49.60 to $1908.00.
Spot platinum increased 1.6% Tuesday to $1,004.60 an ounce and is up 4.1% this week. Platinum gained 7.3% in October. It’s up 3.2% this year. The DG spot price is currently down $11.50 an ounce to $999.00.
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