Gold falls in early Monday trading on a stronger dollar and growing U.S-China trade deal hopes as tensions appear to lessen ahead of the summit between the U.S. and Chinese leaders later this week.
Investors were also awaiting this week’s Federal Reserve policy decision and subsequent statement for further direction. U.S. inflation was lower than analysts forecast last month, in data released Friday which had been delayed by the government shutdown. The figure makes it more likely the Fed will cut interest rates this week, something already widely expected.
The yellow metal also slid on profit taking after gold’s recent record rally.
December gold futures fell 1.8% last week to settle at $4,137.80 an ounce on Comex after the front-month contract lost 0.2% Friday. Bullion is up 6.8% this month after surging 10% in September, the most in six months, and adding 5% in August. It’s up 57% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently down $100.80 (-2.44%) an ounce to $4037.00 and the DG spot price is $4031.80.
The U.S. and China said Sunday that a trade deal between the two countries may be drawing closer as U.S. President Donald Trump and Chinese President Xi Jinping are set to meet this week at the APEC summit in South Korea.
The day before the summit, Fed policy makers are set to meet on monetary policy. Almost 97% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. The Fed lowered interest rates by 25 basis points in September to 4.00% to 4.25%.
The consumer price index data for September on Friday showed that inflation grew at an annual rate of 3%, while it increased 0.2% month-on-month. Both figures were less than analysts had anticipated. Excluding volatile food and energy prices, “core” CPI also rose 3% for the year and posted a 0.2% monthly gain, compared with estimates of 3.1% and 0.3%.
The figure is the only official economic data allowed to be released during the government shutdown and was only published because the data is used to calculate cost-of-living adjustments for Social Security benefit checks.
The Fed closely watches inflation and labor market data when setting monetary policy. A Fed rate cut would be considered bullish for gold, which becomes a more attractive financial asset when rates decline.
Front-month silver futures lost 3% last week to settle at $48.59 an ounce on Comex after the December contract declined 0.2% Friday. Silver is up 4.2% this month after risng 15% in September, the biggest monthly rally in two and a half years, and climbing 11% in August. It rose 21% in 2024. The December contract is currently down $1.261 (-2.60%) an ounce to $47.325 and the DG spot price is $47.52.
Spot palladium fell 2.6% last week to $1,455.00 an ounce after losing 0.7% Friday. Palladium is up 15% this month after rising 14% in September and declining 7.8% in August. Palladium dropped 17% last year. Currently, the DG spot price is down $37.20 an ounce to $1417.00.
Spot platinum decreased $1.30 last week to $1,617.90 an ounce after losing 1.2% Friday. It’s up 3.2% this month after increasing 15% in September and rising 5.9% in August. Platinum lost 8.4% in 2024. The DG spot price is currently down $15.20 an ounce to $1599.70.
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