Gold entrenched in tight range

Gold entrenched in tight range

Gold entrenched in a tight range early Friday, up-ticking on this morning’s inflation data, but headed for a second weekly drop. An important inflation gauge released Friday showed that the rate of price increases cooled as 2023 came to a close, bolstering hopes for Federal Reserve Interest rate cuts.

The Fed’s favorite inflation measure, the personal consumption expenditures price index for December, increased 0.2% on the month and was up 2.9% on a yearly basis, per the Commerce Department’s report released this morning. The monthly data matches the forecast of 0.2%, while the yearly number was slightly less than the 3% forecast. The 12-month rate is the lowest since March 2021. The release adds to evidence that inflation is continuing to drop lower, possibly making the Fed more amenable to cutting interest rates later this year.

Front-month gold futures edged up $1.60 Thursday to settle at $2,036.80 an ounce on Comex, though the most-active April contract slipped 0.6% in the first four days of the week. Bullion gained 0.7% last month after rising 3.2% in November and increasing 6.9% in October. The metal rose 13% in 2023. The February contract is currently up $4.7 (+0.23%) to $2022.50 and the DG spot price is $2021.60.

U.S. fourth-quarter GDP estimates, which came out Thursday, showed the economy grew at a 3.3% annualized rate in the fourth quarter, much more rapidly than the 2% economists had forecast. For all of 2023, the economy accelerated at a 2.5% annualized rate, topping 2022’s 1.9% gain. 

Separately, U.S. initial jobless claims rose 25,000 last week from the week earlier, to 214,000. That was more than the estimate of 199,000. 

Most investors tracked by the CME FedWatch Tool aren’t expecting an interest rate cut until May. Just two weeks ago, the central bank was widely expected to begin reducing rates in March, but a slight majority now forecast it will leave its federal funds rate unchanged at 5.25% to 5.50% that month. 

The Fed also has a monetary policy meeting next week, at which 97.4% of the investors tracked by the tool are betting that the Fed will keep rates steady and 2.6% are expecting a 25 basis point cut. Investors will also be going through the Fed’s meeting statement for signals on the central bank’s next steps. 

The European Central Bank kept interest rates unchanged Thursday, and ECB President Christine Lagarde said that that talk of a rate cut is still “premature” in a news conference following the decision. 

Front-month silver futures rose 0.2% Thursday to $22.93 an ounce on Comex. The March contract rallied 1% in the first four days of the week. Silver dropped 6.1% in December after advancing 12% in November and increasing 2.2% in October. It ticked up 0.2% in 2023. The March contract is currently down $0.002 (-0.01%) an ounce to $22.925 and the DG spot price is $22.83.

Spot palladium lost 3% Thursday to $953.50 an ounce and is down 50 cents so far this week. Palladium advanced 8.6% in December after losing 9.5% in November and dropping 10% in October. Palladium plummeted 38% last year. Currently, the DG spot price is up $14.60 an ounce to $967.50.

Spot platinum retreated 1.7% Thursday to $896.30 an ounce and is down 1.1% so far this week. Platinum rose 8.1% in December after falling 0.7% in November and gaining 3.5% in October. Platinum dropped 6.8% in 2023. The DG spot price is currently up $21.80 to $917.30.

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