Gold slipped early Monday as profit-taking erased some of last week’s gains. The yellow metal posted its first weekly gain in four last week on U.S. interest rate cut hopes.
Chicago Federal Reserve President Austan Goolsbee said Friday that inflation data released last week for May was “very good” but that policymakers need to see more months like this to get to the central bank’s 2% inflation target and feel better about cutting rates. But earlier in the day, Cleveland Fed President Loretta Mester said that she thinks “the risks to inflation are still on the upside” in an interview with Bloomberg.
The consumer price index report last week showed that inflation slowed in May, though consumer prices were up 3.3% from a year earlier. The Fed has said it closely watches inflation and the labor market when setting monetary policy. It kept interest rates unchanged again Wednesday.
August gold futures rose 1% last week to settle at $2,349.10 an ounce on Comex after the most-active contract gained 1.3% Friday. Bullion gained 1.9% last month after rallying 2.9% in April and rising 8.9% in March – the biggest monthly gain in more than three years. May’s was the fourth consecutive monthly rally. The metal rose 13% in 2023. The August contract is currently down $10.60 (-0.45%) an ounce to $2338.50 and the DG spot price is $2324.20.
U.S. consumer sentiment fell for a third consecutive month in June, according to data released Friday from the University of Michigan. The index is still below levels typically associated with a healthy economy.
Policymakers are projecting that they will only cut interest rates once this year, a switch from the three reductions expected at the start of the year, as inflation has remained persistently high. The prospect of continued high interest rates would be considered bearish for the yellow metal, which becomes less attractive than some other assets when rates are high.
The CME FedWatch Tool shows 89.7% of the investors tracked are betting that the Fed will keep rates unchanged in July. But 64.1% 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.
In economic news this week, the U.S. Empire manufacturing data comes out Monday, followed by U.S. retail sales, business inventories, industrial production and cross-border investment data on Tuesday. A number of Fed officials are also set to speak this week.
July silver futures edged up 0.1% last week to settle at $29.47 an ounce on Comex after the front-month contract rallied 1.4% Friday. Silver surged 14% last month after rising 7% in April and gaining 8.9% in March. It ticked up 0.2% in 2023. The July contract is currently up $0.058 (+0.20%) an ounce to $29.530 and the DG spot price is $29.45.
Spot palladium fell 1.8% last week to $906.50 an ounce, though it increased 1% Friday. Palladium declined 5.1% in May after losing 5.9% in April and advancing 7.7% in March. Palladium plummeted 38% last year. The DG spot price is currently down $10.00 an ounce to $897.50.
Spot platinum decreased 1.2% last week to $961.70 an ounce but gained 0.3% Friday. Platinum advanced 10% in May after gaining 3.1% in April and rising 3.3% in March. Platinum dropped 6.8% in 2023. Currently, the DG spot price is up $10.50 an ounce to $972.40.
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