Gold gains slightly on inflation data

Gold gains slightly on inflation data

Gold gains slightly on inflation data as the dollar softens. The yellow metal still poised near its lowest level in four months.

Inflation pressures eased a bit in May as consumers put the brakes on spending, according to the Commerce Department. The personal consumption expenditures price index, which is a favorite inflation barometer for the Federal Reserve, increased 0.3% for the month when excluding food and energy. The monthly number is even with the street’s forecast, while the so-called core PCE’s increase of 4.6% from a year ago is a 0.1 percentage point less than expected.

The Federal Reserve‚Äôs favorite inflation measure, the personal consumption expenditure price index, comes out Friday with May data. Policymakers have said they closely watch data on inflation and the labor market when making monetary policy decisions. 

Fed Chairman Jerome Powell said Thursday in Madrid that the central bank is likely to raise interest rates twice more this year to rein in inflation, further weighing on gold prices. Higher interest rates are typically bearish for the precious metal.

August gold futures dropped 0.2% Thursday to settle at $1,917.90 an ounce on Comex, and the front-month contract is down 0.6% this week. Bullion is down 3.2% this month after retreating 0.9% in May and increasing 0.6% in April. The metal fell $2.40 in 2022. The August contract is currently up $1.8 (+0.09%) an ounce to $1919.70 and the DG spot price is $1913.90.

About 86.8% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at its July monetary policy meeting, while 13.2% 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.

The monthly U.S. employment report for June comes out next week, after markets close Tuesday for the July Fourth holiday. The minutes of the last Fed policy meeting are set for release July 5 and are bound to be parsed closely. The central bank left its benchmark federal funds rate at 5.00% to 5.25% earlier this month, its first pause after 10 consecutive rate increases to combat inflation.

September silver futures fell 1.2% Thursday to settle at $22.80 an ounce on Comex, though the most-active contract rallied 1.1% in the first four days of the week. Silver is down 3.4% in June after decreasing 6.5% in May and gaining 4.4% in April. It rose 3% in 2022. The September contract is currently down $0.148 (-0.65%) an ounce to $22.650 and the DG spot price is $22.53.

Spot palladium decreased 1.5% Thursday to $1,255.50 an ounce and is down 3.8% so far this week. Palladium is down 9.2% this month after falling 9.3% in May and rising 2% in April. Palladium lost 5.7% in 2022. Currently, the DG spot price is up $20.60 an ounce to $1273.00.

Spot platinum dropped 1.9% Thursday to $905.20 an ounce and is down 2.4% so far this week. Platinum is down 9.9% in June after retreating 7.4% in May and adding 8.5% in April. Platinum surged 10% in 2022. The DG spot price is currently slightly down, $2.50 an ounce, to $905.30.

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