Gold touches three-week high early Friday, extending the 2024 rally, before slipping on this morning’s ISM report. The yellow metal posted its biggest annual gain since 2010 as the yellow metal attracted haven investors seeking safe assets amid geopolitical and economic uncertainty.
The report from the Institute for Supply Management Manufacturing Business Survey Committee (Manufacturing PMI) registered 49.3 percent in December, that’s a 0.9 percentage point raise compared to November’s 48.4 percent. The overall economy continued in expansion for the 56th month after one month of contraction in April 2020. (A Manufacturing PMI above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.)
Markets were looking to monetary policy and decisions from the incoming U.S. presidential administration that could affect the economy for further direction. The rally last year was spurred by the Federal Reserve, the economy and global central bank buying cycles.
Investors are closely watching upcoming economic reports for signs of what the Fed may do next. U.S. jobless claims figures for last week and next week will bring the closely watched U.S. jobs reports and consumer sentiment data as well as the minutes of the Fed’s December meeting.
Front-month gold futures rose 1.1% Thursday to settle at $2,669.00 an ounce on Comex, and the most-active February contract advanced 1.4% so far this week. Bullion dropped 1.5% in December after losing 2.5% in November and rising 3.4% in October. The metal gained 27% in 2024. The February contract is currently down $11.10 (-0.42%) an ounce to $2657.90 and the DG spot price is $2647.10.
Trading was light this week around the New Year’s holiday, which closed most global markets. Most U.S. financial markets will shutter next week, on Jan. 9, for a national day of mourning for former U.S. President Jimmy Carter.
The new 119th U.S. Congress will begin its term Friday, with both houses of the body under control of the Republicans for the first time since 2019. President-elect Donald Trump will be sworn in Jan. 20. His inauguration coincides with the federal holiday for Martin Luther King Jr. Day, which will also close most U.S. markets.
Trump’s stated plans for tariffs and deportations and their potential economic impact could affect the outlook for gold if implemented. The Fed’s anticipated interest rate cuts could also bolster the precious metal, which becomes a more attractive investment when rates go down. Conversely, unexpectedly keeping rates unchanged would be bearish for gold.
Almost 89% of the investors tracked by the CME FedWatch Tool are now betting that the Fed will keep rates unchanged at the end of this month. The rest expect another 25 basis point cut.
The Fed’s benchmark interest rate is currently at 4.25% to 4.50% after rate cuts in September, November and December. Previously, the central bank had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to combat inflation.
The minutes of the Fed’s December meeting, due out next week, may shed more light on the state of the economy and how many interest rate cuts the central bank is likely to make in 2025. The markets have largely priced in two interest rate cuts this year.
Front-month silver futures rallied 2.3% Thursday to $29.90 an ounce on Comex, though the most-active March contract slipped 0.2% so far this week. Silver dropped 6% in December after falling 5.1% in November and advancing 4.3% in October. It gained 21% in 2024. The March contract is currently up $0.300 (+1.00%) an ounce to $30.200 and the DG spot price is $29.79.
Spot palladium decreased 50 cents Thursday to $928.00 an ounce and is down $1 so far this week. Palladium fell 6.7% in December after sliding 12% in November and increasing 11% in October. Palladium dropped 17% last year. Currently, the DG spot price is up $11.90 an ounce to $939.00.
Spot platinum rose 1.5% Thursday to $926.40 an ounce and is up 0.2% so far this week. Platinum lost 4.6% last month after declining 4.2% in November and rising 1.5% in October. Platinum slid 8.4% in 2024. The DG spot price is currently up $25.20 an ounce to $950.90.
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