Gold firms ahead of economic data

Gold firms ahead of economic data

Gold firms on weakened dollar ahead of this week’s key economic data as investors eye the Federal Reserve’s interest rate cut plans for the next few months.

Investors are awaiting the U.S. PMI report due Wednesday for further direction and signals on what the Fed may do in its quest to tame inflation. Other key U.S. economic data due this week include reports on inflation and GDP. 

Front-month gold futures edged up 0.2% Tuesday to settle at $2,045.20 an ounce on Comex, though the most-active April contract slipped 0.2% in the first two days of the week. Bullion gained 0.7% last month after rising 3.2% in November and increasing 6.9% in October. The metal rose 13% in 2023. The February contract is currently up $7.00 (+0.35%) an ounce to $2032.80 and the DG spot price is $2030.70.

Most investors tracked by the CME FedWatch Tool aren’t expecting an interest rate cut until May. Just two weeks ago, the central bank was widely expected to begin reducing rates in March, but a slight majority now forecast it will leave its federal funds rate unchanged at 5.25% to 5.50% that month. 

The Fed has raised interest rates by 5.25 percentage points since March 2022 to curb inflation. High interest rates are typically bearish for gold, but rate cuts would be bullish.

The Fed also has a monetary policy meeting next week, at which 97.4% of the investors tracked by the CME tool are betting that the Fed will keep rates steady and 2.6% are expecting a 25 basis point cut. Investors will also be closely parsing the Fed’s statement after the meeting for signals on next steps. 

The Fed’s favorite inflation measure, the personal consumption expenditures price index is due out at the end of the week with December data. Also expected to be closely watched, U.S. fourth-quarter GDP estimates are due on Thursday. 

Separately, the European Central Bank has a rate decision scheduled for Thursday. 

Front-month silver futures rose 0.7% Tuesday to $22.46 an ounce on Comex. The March contract fell 1.1% in the first two days of the week. Silver dropped 6.1% in December after advancing 12% in November and increasing 2.2% in October. It ticked up 0.2% in 2023. The March contract is currently up $0.533 (+2.37%) an ounce to $22.995 and the DG spot price is $22.89.

Spot palladium gained 1.3% Tuesday to $962.00 an ounce and is up 0.8% so far this week. Palladium advanced 8.6% in December after losing 9.5% in November and dropping 10% in October. Palladium plummeted 38% last year. Currently, the DG spot price is up $22.20 an ounce to $980.00.

Spot platinum advanced 0.6% Tuesday to $906.40 an ounce and is unchanged so far this week. It Platinum rose 8.1% in December after falling 0.7% in November and gaining 3.5% in October. Platinum dropped 6.8% in 2023. The DG spot price is currently up $8.50 an ounce to $913.00.

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