Gold edges higher in holiday week trading

Gold edges higher in holiday week trading

Gold edges higher Wednesday morning in holiday week trading as investors awaited further signals on monetary policy after Federal Reserve Chairman Jerome Powell said Tuesday that the country’s economy was on a “deflationary path.”

The yellow metal also boosting this morning on sluggish payroll numbers. Private payroll growth declined in June, per this morning’s ADP report, indicating a potential slowdown. Companies added 150,000 jobs for the month, below the forecasted total of 160,000. That’s the lowest monthly gain since January. Another positive indicator for inflation, the pace of wage gains also moved lower for those who stayed in their jobs, down to 4.9% on a year-over-year basis for the smallest rise since August 2021.

The minutes of the June Fed policy meeting are due out Wednesday and will provide investors with a snapshot of policymakers’ thinking on monetary policy at the time – including how many interest rates to expect this year and the state of the economy.

U.S weekly initial jobless claims for last week from the Labor Department are scheduled to come out Wednesday, with the most closely watched U.S. monthly employment report due out Friday, also with June data. 

August gold futures slipped 0.2% Tuesday to settle at $2,333.40 an ounce on Comex after the most-active contract fell 0.3% in the first two days of the week. Gold trading is likely to be light this week and possible volatile as U.S. financial markets are set to close Thursday for the Independence Day holiday. Bullion fell 0.3% last month after gaining 1.9% in May and 2.9% in April. The metal rose 13% in 2023. The August contract is currently up $25.90 (+1.11%) an ounce to $2359.30 and the DG spot price is $2354.30.

Powell said that more data is needed before the Fed can begin a long-expected series of interest rate cuts. 

U.S. inflation grew at the slowest pace in six months in May, according to the Federal Reserve’s favorite inflation measure, the personal consumption expenditures price index, which came out last week. Taken alone, the data bolster the likelihood of an interest rate cut sooner rather than later. That would be bullish for gold, which typically gets a boost when interest rates drop. 

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. Interest rates affect gold prices because they influence the attractiveness of the yellow metal in respect to other assets.

The Fed has a 2% inflation target. 

The CME FedWatch Tool shows 93.3% of the investors tracked are betting that the Fed will keep rates unchanged this month. But 68.3% expect the central bank to start cutting in September. The Fed kept interest rates unchanged again in June.

September silver futures rose 0.2% Tuesday to settle at $29.66 an ounce on Comex, and the front-month contract gained 0.3% in the first two days of the week. Silver fell 2.9% last month after surging 14% in May and rising 7% in April. It ticked up 0.2% in 2023. The September contract is currently up $0.982 (+3.31%) an ounce to $30.640 and the DG spot price is $30.40.

Spot palladium rose 4.2% Tuesday to $1,029.50 an ounce after gaining 3.8% so far this week. Palladium rallied 8.1% last 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 $27.70 an ounce to $1052.50.

Spot platinum rallied 1.8% Tuesday to $1,001.70 an ounce and slipped 0.2% in the first two days of the week. Platinum fell 3.7% last month after advancing 10% in May and 3.1% in April. Platinum dropped 6.8% in 2023. The DG spot price is currently up $5.20 an ounce to $1006.40.

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