Gold heads for best week in seven months, rising above the $1900 mark early Friday on safe haven investing.
The yellow metal got a boost from haven investors seeking protection against uncertainty from the conflict in the Middle East as well as speculation that U.S. interest rates may have peaked.
Gold came off a two-week high after the U.S. consumer price index for September came in higher than expected on Thursday. The more closely watched “core” CPI figure – which excludes volatile food and energy prices – came in right at expectations, though, which probably makes the report neutral for Federal Reserve policymakers determining monetary policy.
The Fed has raised rates by 5.25 percentage points since March 2022. High rates are bearish for gold, making it less attractive as an alternate investment.
Front-month gold futures slipped 0.2% Thursday to settle at $1,883.00 an ounce on Comex, and the December contract gained 2.1% in the first four days of the week. Bullion fell 5.1% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 3.1% in 2023. The December contract is currently up $41.10 (+2.18%) an ounce to $1921.40 and the DG spot price is $1909.20.
U.S. CPI rose 0.4% month-on-month in September, above the 0.3% consensus estimate of economists. The figures were 3.7% and 3.6% on an annual basis. But so-called core CPI rose 0.3% last month and 4.1% year on year, in line with expectations. The core numbers are seen as better predictors of long-term trends.
The producer price index, which measures wholesale inflation, came in higher than expected on Wednesday. The index for September increased 0.5%, compared with a 0.3% estimate from economists.
Fed policymakers last month agreed that the central bank would need to keep interest rates elevated until they’re convinced inflation is back to the Fed’s target, according to minutes of the September meeting released Wednesday. But opinions were split about whether more rate hikes would be needed.
The central bank held its benchmark interest rate at 5.25% to 5.50% in September. About 94.4% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 5.6% expect it to raise rates another 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold, though also by a smaller margin.
Fed policymakers have said they closely watch data on inflation and the labor market when setting monetary policy.
Front-month silver futures dropped up 0.8% Thursday to settle at $21.96 an ounce on Comex, though the December contract advanced 1.1% in the first four days of the week. Silver decreased 9.5% last month after slipping 0.6% in August and gaining 8.5% in July. It’s down 8.7% in 2023. The December contract is currently up $0.686 (+3.12%) an ounce to $22.645 and the DG spot price is $22.43.
Spot palladium fell 2% Thursday to $1,159.00 an ounce, and it lost 2.2% so far this week. Palladium rose 3% last month after sliding 5.3% in August and rising 3.6% in July. Palladium has plummeted 36% so far this year. Currently, the DG spot price is down $7.00 an ounce to $1155.50.
Spot platinum dropped 2.2% Thursday to $876.00 an ounce, and it decreased 1.2% in the first four days of the week. Platinum declined 6.6% last month after advancing 1.7% in August and gaining 5.2% in July. Platinum is down 18% in 2023. The DG spot price is currently up $8.10 an ounce to $885.90.
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