Gold firms above $4,000 an ounce in Monday morning trading as investors await Wednesday’s private payroll data. That’s despite a stronger dollar, the end of a tax rebate in China and concern that the Federal Reserve may not cut interest rates again this year.
A stronger dollar made gold a less attractive investment to holders of other currencies, and the possibility that the Fed would keep rates unchanged in December was bearish for the yellow metal. But the U.S. government shutdown, now in its 34th day, is adding to uncertainty and fueling some haven demand, along with various global conflicts and trade disputes.
Separately, gold jewelry prices tumbled in China after the world’s largest gold-consuming country on Saturday said it would no longer allow some retailers to offset a value-added tax when selling gold they bought from the Shanghai Gold Exchange and Shanghai Futures Exchange. This applies whether the gold was sold directly or after processing, Bloomberg reported.
December gold futures fell 3.4% last week to settle at $3,996.50 an ounce on Comex after the front-month contract lost 0.5% Friday. Bullion increased 3.2% last month after surging 10% in September, the most in six months, and adding 5% in August. It’s up 53% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $42.00 (+1.05%) an ounce to $4038.50 and the DG spot price is $4019.70.
The yellow metal rose to a series of record highs in October but has since declined on profit taking and other factors. Some of the rally was triggered by central bank buying and haven demand, factors that still exist.
Fed Chairman Jerome Powell raised doubts about whether the Fed would cut again in December in his remarks following the interest rate reduction to 3.75% to 4.00% announced Wednesday.
Over 70% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by another 25 basis points in December, compared with more than 94% a week ago. The cut last week was the second 25-basis point reduction in a row. 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.
Front-month silver futures fell 0.9% last week to settle at $48.16 an ounce on Comex after the December contract slid 0.9% Friday. Silver gained 3.3% in October after rising 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 up $0.425 (+0.88%) an ounce to $48.585 and the DG spot price is $48.70.
Spot palladium lost 0.8% last week to $1,444.00 an ounce after dropping 0.8% Friday. Palladium rose 14% last month after rising 14% in September and declining 7.8% in August. Palladium dropped 17% last year. The current DG spot price is up $3.40 an ounce to $1449.50.
Spot platinum decreased 2.2% last week to $1,583.00 an ounce after losing 2% Friday. It advanced 1% in October after gaining 15% in September and rising 5.9% in August. Platinum lost 8.4% in 2024. The DG spot price is currently up $7.20 an ounce to $1578.30.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.