Gold ebbs ahead of next inflation report

Gold ebbs ahead of next inflation report

Gold slightly ebbs ahead of next inflation report. The yellow metal ticked down as the dollar and treasuries gained ground early Monday as investors awaited the next key economic report on Thursday for signals on what the Federal Reserve will do next.

The upcoming consumer price index data will be closely parsed for the latest on U.S. inflation and whether additional Fed interest rate cuts will be necessary to rein in the high costs of goods and services. The U.S. monthly jobs report for July, which came out Friday, signaled that the labor market is cooling, but unemployment declined and wages increased. 

Front-month gold futures fell 1.2% last week to settle at $1,976.10 an ounce on Comex, though the December contract gained 0.4% Friday. Bullion rose 4.1% in July after losing 2.7% in June and retreating 0.9% in May. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. The December contract is currently down $1.2 (-0.06%) an ounce to $1974.90 and the DG spot price is $23.40.

U.S. nonfarm payrolls grew by 187,000 in July, according to the Bureau of Labor Statistics, smaller growth than economists had expected. The unemployment rate slipped to 3.5%. 

Declines in inflation, combined with weakness in the labor market, would likely increase speculation that the Fed has come to the end of its series of interest rate hikes. The central bank has raised rates by 5.25 percentage points since March 2022. A pause in rate hikes would be considered bullish for gold because the metal becomes less attractive to investors when rates go up. 

About 84.5% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in September at 5.25% to 5.50%. Just 15.5% expect it to raise rates another 25 basis points. Most investors tracked by the tool are betting that it will then hold at that rate at the remaining meetings this year. 

September silver futures lost 3.2% last week to settle at $23.72 an ounce on Comex, though the most-active contract edged up 1.9 cents Friday. Silver gained 8.5% in July after dropping 2.4% in June and decreasing 6.5% in May. It retreated 4.2% in the first half of the year after rising 3% in 2022. The September contract is currently down $0.161 (-0.68%) an ounce to $23.555 and the DG spot price is $23.44.

Spot palladium increased 1.5% last week to $1,283.50 an ounce after gaining 0.6% Friday. Palladium rose 3.6% in July after falling 9.5% in June and tumbling 9.3% in May. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. Currently, the DG spot price is down $14.60 an ounce to $1268.00.

Spot platinum slid 1.3% last week to $929.40 an ounce, though it advanced 0.8% Friday. Platinum gained 5.2% in July after falling 9.3% in June and retreating 7.4% in May. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently down $2.80 an ounce to $928.00.

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