Gold gains on this morning’s cooler inflation report. The yellow metal had been standing firm overnight on a softer dollar, then gained over $15 an ounce on the new data.
Inflation dropped to its lowest annual rate in over two years during June. The consumer price index increased 3% from a year ago, which is the lowest gain since March 2021. On a monthly basis, the index rose 0.2%. These numbers are better than the Dow Jones forecast for each of these estimates which had increases of 3.1% and 0.3%, respectively.
The Fed’s favorite inflation measure, the personal consumption expenditure price index, released last Friday, showed that U.S. inflation cooled in May.
The dollar traded near its lowest level in two months, making gold a more attractive investment to holders of other currencies. Both the U.S. currency and Treasury yields have softened amid anticipation that the CPI will show inflation moderated last month. That may influence the Federal Reserve’s next moves to curb inflation.
August gold futures rose 0.3% Tuesday to settle at $1,937.10 an ounce on Comex, and the front-month contract rallied 0.2% in the first two days of the week. Bullion dropped 2.7% last month after retreating 0.9% in May and increasing 0.6% in April. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022.The August contract is currently up $21.80 (+1.13%) an ounce to $1958.90 and the DG spot price is $25.10.
About 92.4% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise rates by 25 basis points at its July monetary policy meeting, while 7.6% expect it to keep rates unchanged. The Fed has increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022.
Fed policymakers have said they closely track reports on both the labor market and inflation, though most investors still expect another rate hike next month. Higher interest rates are typically bearish for gold, making the yellow metal less attractive to investors than other assets. The U.S. added just 209,000 jobs last month, according to data released last week by the Bureau of Labor Statistics.
The Fed held rates unchanged last month for the first time after 10 consecutive increases. The Fed left its benchmark federal funds rate at 5.00% to 5.25% last month.
September silver futures lost 0.3% Tuesday to $23.28 an ounce on Comex, and the most-active contract is down 0.8 cent so far this week. Silver dropped 2.4% in June after decreasing 6.5% in May and gaining 4.4% in April. It retreated 4.2% in the first half of the year after rising 3% in 2022. The September contract is currently up $0.814 (+3.50%) an ounce to $24.095 and the DG spot price is $24.05.
Spot palladium rose 0.4% Tuesday to $1,266.50 an ounce, though it dropped 0.4% in the first two days of the week. Palladium fell 9.5% in June after tumbling 9.3% in May and rising 2% in April. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022.The current DG spot price is up $46.60 an ounce to $1319.50.
Spot platinum slipped 0.1% Tuesday to $934.70 an ounce, though it’s up 1.4% so far this week. Platinum fell 9.3% in June after retreating 7.4% in May and adding 8.5% in April. Platinum dropped 15% in the first half of the year after surging 10% in 2022. Currently, the DG spot price for platinum is up $29.80 an ounce to $964.30.
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