Gold headed for weekly gain, sticking near Thursday’s record high. The yellow metal shrugged off this morning’s mild inflation report.
The way toward future interest cuts was eased by this morning’s inflation report for August. The Commerce Department’s personal consumption expenditures price index shows a slight rise of 0.1% for the month, putting the 12-month inflation rate at 2.2%, down from 2.5% in July and the lowest since February 2021. The number in inline for economists’ projections. The Fed focuses on the PCE as a key measure of the cost of goods and services in the U.S. economy.
While the yellow metal was near a record, silver was near its highest level in more than a decade on the expectations of further loosening in monetary policy by the Fed, Chinese stimulus measures and haven demand around the escalating conflicts in the Middle East.
Front-month gold futures rose 0.4% Thursday to settle at $2,694.90 an ounce on Comex. The most-active December contract added 1.8% in the first four days of the week. Bullion is up 6.6% this month after advancing 2.2% in August and increasing 5.7% in July, its biggest monthly gain since March. The metal rose 13% in 2023. The December contract currently is down $2.30 (-0.09%) an ounce to $2692.60 and the DG spot price is $2669.90.
Front-month silver futures increased 1% Thursday to $32.34 an ounce on Comex. The December contract advanced 2.7% in the first four days of the week. Silver is up 11% this month after gaining 0.7% in August and dropping 2.1% in July. It ticked up 0.2% in 2023. The December contract is currently up $0.229 (+0.71%) an ounce to $32.570 and the DG spot price is $32.19.
Gold climbed last week after the Fed cut rates for the first time since the pandemic, dropping them by 50 basis points to 4.75% to 5.00%. Meanwhile, China’s central bank announced its biggest stimulus since the pandemic this week.
The Fed rate cut came after the central bank kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation. Interest rate cuts are typically considered bullish for gold, which become more attractive alternate investments when rates go down.
The Fed has said it closely looks at both inflation and labor market data when crafting monetary policy. U.S. weekly initial jobless claims unexpectedly fell last week, according to data released Thursday. The decline suggests that the U.S. labor market remains resilient.
All investors tracked by the CME FedWatch Tool agree that the Fed will likely cut rates again in November, though they’re almost evenly split on whether to expect another 50 basis point reduction or a 25 basis point one. The Fed has two scheduled policy meetings left this year, and most investors tracked by the tool expect rates to drop to 4.00% to 4.25% or lower by the end of 2024.
Spot palladium rose 1% Thursday to $1,059.50 an ounce, though it fell 2.6% in the first four days of the week. Palladium is up 8.2% in September after increasing 3.2% in August and decreasing 4.3% in July. Palladium plummeted 38% last year. Currently, the DG spot price is down $20.70 an ounce to $1040.50.
Spot platinum rallied 1.9% Thursday to $1,015.90 an ounce and is up 3.2% so far this week. Platinum is up 9.1% this month after sliding 5.2% in August and losing 2.1% in July. Platinum dropped 6.8% in 2023. The DG spot price is currently up $6.60 an ounce to $1022.00.
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