Gold edges higher early Monday amid as softer Treasury yields slip while investors awaited further direction on monetary policy from key inflation data due at the end of the week.
Weaker Treasury yields make gold a more attractive alternate asset for investors. The prospect of an upcoming interest rate cut would also be bullish since gold becomes less attractive than some other assets when rates are elevated.
The Federal Reserve’s favorite inflation measure, the personal consumption expenditures price index, comes out Friday. The central bank closely watches interest rates and the labor market when setting monetary policy. A number of Fed officials are also scheduled to speak this week, and their comments will be closely parsed for indications on their leanings. The central bank kept interest rates unchanged again earlier this month.
August gold futures fell 0.8% last week to settle at $2,331.20 an ounce on Comex after the most-active contract lost 1.6% Friday. Bullion is down 0.6% this month after gaining 1.9% in May and 2.9% in April. The metal rose 13% in 2023. The August contract is currently up $13.1 (+0.56%) an ounce to $2344.30 and the DG spot price is $2333.40.
Most market speculation remains around monetary policy and when the Fed might begin interest rate cuts, though heightening geopolitical tensions are also keeping prices elevated.
The inflation gauge, the PCE index, is forecast to show 2.6% annual growth overall and in the core index, which excludes volatile food and energy prices, according to economists’ projections gathered by Bloomberg. Month-on-month, the core May index is likely to gain 0.1%.
Richmond Fedl President Thomas Barkin, a voting member this year of the central bank’s policy-setting Federal Open Market Committee, said Thursday that he needs more sustained and convincing progress toward the Fed’s 2% inflation target before starting to cut rates.
At least five Fed officials are scheduled to speak this week and may provide further direction. They include San Francisco Fed President Mary Daly and Fed Governors Chritopher Waller, Lisa Cook and Michelle Bowman. U.S. Conference Board consumer confidence data also come out Tuesday.
The CME FedWatch Tool shows 89.7% of the investors tracked are betting that the Fed will keep rates unchanged in July. But 65.9% expect the central bank to start cutting in September. The Fed has kept interest rates steady at 5.25% to 5.50% for about a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
September silver futures gained 1.6% last week to settle at $29.94 an ounce on Comex, though the front-month contract fell 3.9% Friday. The most-active contract rolled to September from July last week. Silver is down 1.6% this month after surging 14% in May and rising 7% in April. It ticked up 0.2% in 2023. The September contract is currently up $0.023 (+0.08%) an ounce to $29.965 and the DG spot price is $29.72
Spot palladium climbed 7.8% last week to $977.50 an ounce after gaining 5.3% Friday. Palladium is up 6.5% this month after declining 5.1% in May and losing 5.9% in April. Palladium plummeted 38% last year. Currently, the DG spot price is up $61.40 an ounce to $1036.00.
Spot platinum increased 4% last week to $1,000.60 an ounce after rising 1.5% Friday. Platinum is down 4% this month after advancing 10% in May and 3.1% in April. Platinum dropped 6.8% in 2023. The DG spot price is currently up $9.30 an ounce to $1009.00.
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