Gold Extends Record Rally

Gold Extends Record Rally

Gold extends record breaking rally, rising early Monday, as momentum grew in the yellow metal, fueled by central bank buying and haven demand.

Uncertainty over the conflicts in Gaza and Ukraine made gold a more attractive investment. Speculation about interest rate cuts this year is also bullish for the precious metal, but the timeline may be delayed after a strong U.S. jobs report on Friday. 

Front-month gold futures gained 4.8% last week to settle at $2,345.40 an ounce on Comex, after the most-active June contract increased 1.6% Friday. Bullion rose 8.9% in March – the biggest monthly rise in more than three years – after dropping 0.6% in February and declining 0.2% in January. The metal rose 13% in 2023. The June contract is currently up $12.10 (+0.52%) an ounce to $2357.50 and theh DG spot price is $2341.60.

U.S. monthly jobs growth surpassed expectations for March in data from the Bureau of Labor Statistics on Friday. The U.S. added 303,000 positions last month, the largest gain in more than a year. Unemployment also fell to 3.8%. 

Friday’s jobs report will likely be a key indicator, as the Fed has said it closely watches both labor market conditions and inflation when determining monetary policy. High rates are considered bearish for gold, while a cut would be considered bullish.

The next big economic report due out is the U.S. consumer price index for March, scheduled for release on Wednesday. The Fed’s favorite inflation measure, the personal consumption expenditure price index, came out in line with expectations for February. 

The minutes of the Fed’s last policy meeting also come out Wednesday and are likely to be read closely for indications on future direction. Consumer sentiment data comes out Friday.

About 99.0% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates unchanged in May, while 1.0% expect a 25 basis point cut. The central bank has raised interest rates by 5.25 percentage points since March 2022 in an effort to cut inflation, but kept rates unchanged at 5.25% to 5.50% at its meeting last month. Just over half of investors are expecting a rate cut in June, with more anticipating a rate cut in July.

Front-month silver futures rose 10% last week to settle at $27.50 an ounce on Comex, after the May contract advanced 0.9% Friday. Silver gained 8.9% in March after losing 1.2% in February and falling 3.8% in January. It ticked up 0.2% in 2023. The May contract is currently up $0.422 (+1.53%) an ounce to $27.925 and the DG spot price is $27.85.

Spot palladium decreased 1.3% last week to $1,014.50 an ounce after falling 3.2% Friday. Palladium advanced 7.7% last month after falling 4.6% in February and tumbling 11% in January. Palladium plummeted 38% last year. The current DG spot price is up $18.60 an ounce to $1030.50.

Spot platinum gained 2.1% last week to $933.90 an ounce, but lost 1.4% Friday. Platinum rose 3.3% last month after decreasing 4.9% in February and falling 8% in January. Platinum dropped 6.8% in 2023. The DG spot price is currently up $13.40 an ounce to $948.00.

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