Gold fell as bullish bets fizzled

Gold fell as bullish bets fizzled

Gold fell early Monday as last week’s bullish bets that the Federal Reserve may be about to end its cycle of interest rate hikes fizzled out. 

Trading was also expected to be light this week going into the U.S. Thanksgiving holiday on Thursday. Last week, gold posted its first weekly gain in three on interest rate speculation and, subsequently, a weaker dollar and Treasury yields. Gold comes under pressure when interest rates, the dollar and Treasury yields are strong, and last week was the dollar’s worst in four months. 

Front-month gold futures rose 2.4% last week to settle at $1,984.70 an ounce on Comex, though the December contract slipped 0.1% Friday. Bullion gained 6.9% in October after falling 5.1% in September and dropping 2.2% in August. The metal is up 8.7% in 2023. The December contract is currently down $12.00 (-0.60%) an ounce to $1972.70 and the DG spot price is $1972.20.

CME FedWatch Tool shows that 99.8% of the investors it tracks are betting that the Fed will keep its federal funds rate unchanged in December, a shift from 90.9% a week ago, and .2% of the investors think the Fed will lower the rates by 25 basis points. The Fed has boosted interest rates by 5.25 percentage points since March 2022 to curb inflation to the 2% level. The Fed kept interest rates unchanged at 5.25% to 5.50% earlier this month. The central bank has raised interest rates only once since May. 

Minutes of the last Fed policy meeting in November are due out Tuesday and will be closely watched by investors for further signals on monetary policy. 

In other economic news, U.S. weekly initial jobless claims come out Wednesday, early because of the Thanksgiving holiday. Final consumer sentiment data for November are also due out Wednesday. U.S. manufacturing PMI comes out Friday. The U.S. retail holiday sales season, which is often used as an economic indicator, begins at the end of this week with Black Friday. 

Separately, gold came under some pressure following a deal between Israel and Hamas for the group to release hostages taken during the Oct. 7 attack on Israel. This is likely to trigger a multiday pause in the conflict. That’s bearish for gold, a haven asset in times of geopolitical uncertainty. 

December silver futures increased 7.1% last week to settle at $23.85 an ounce on Comex. March is now the most-active contract, and it fell 0.3% Friday to $24.20 Friday. Silver increased 2.2% last month after decreasing 9.5% in September and slipping 0.6% in August. It’s down 0.7% in 2023. The December contract is currently down $0.257 (-1.08%) an ounce to $23.595 and the DG spot price is $23.48.

Spot palladium surged 9.2% last week to $1,071.00 an ounce, and it advanced 1.6% Friday. Palladium dropped 10% in October after rising 3% in September and sliding 5.3% in August. Palladium has plummeted 41% so far this year. Currently, the DG spot price is up $27.10 an ounce to $1096.00.

Spot platinum rose 6.4% last week to $905.10 an ounce and edged up 70 cents Friday. Platinum gained 3.5% in October after declining 6.6% last month and advancing 1.7% in August. Platinum is down 15% in 2023. The DG spot price is currently up $10.10 an ounce to $913.80.

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