Gold climbed back near a record high early Friday, heading for a fourth consecutive weekly gain after weak job and inflation data this week made it all but certain that the Federal Reserve will cut interest rates next week. Silver joined the soaring yellow metal, hitting a 14-year high.
The weekly initial jobless claims report from the Labor Department on Thursday showed a surprise increase to the highest level since October 2021. At the same time, the consumer price index for August posted its biggest month-on-month increase since January. They were the final key economic reports that Fed policymakers will receive before issuing their next monetary policy decision on Wednesday. A rate cut would be considered bullish for gold, making it a more attractive alternate investment.
December gold futures slipped 0.2% Thursday to settle at $3,673.60 an ounce on Comex, and the front-month contract gained 0.6% in the first four days of the week. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 39% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $12.60 (+0.34%) an ounce to $3686.20 and the DG spot price is $3650.30.
Gold this week topped its inflation-adjusted record high set in 1980, Bloomberg reported.
New applications for unemployment benefits rose to a seasonally adjusted 263,000 in the week ended Sept. 6, higher than economists’ estimate of 235,000. The reported figure was also 27,000 higher than the prior week’s revised figure.
The Fed has said it closely watches jobs and inflation data when setting monetary policy. But the monthly consumer price index, which typically would attract more investor attention than the weekly jobs report, took a backseat to the jobs report Thursday, though the figures were also weak.
Core CPI, which excludes volatile food and energy prices rose 0.3% month on month in August and 3.1% year on year, in line with forecasts. But headline CPI rose 0.4% in August on a monthly basis, the biggest gain since January. Meanwhile, the year-on-year inflation rate reached 2.9%, the highest reading since January.
Earlier in the week, the Labor Department revised down job growth for the 12 months ended in March by 911,000 from a previous estimate. It was seen a signal that the labor market is weaker than previously determined.
Despite a series of rate cuts last year, the Fed has yet to begin reductions in 2025. The Fed last kept interest rates unchanged in July at 4.25% to 4.50%.
All of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates next week, with over 92% expecting a 25 basis point cut and the rest anticipating a 50 basis point cut. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver rose fell 1.3% Thursday to settle at $42.15 an ounce on Comex, and the metal increased 1.4% in the first four days of the week. Silver rallied 11% last month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently up $0.421 (+1.00%) an ounce to $42.570 and the DG spot price is $42.10.
Spot palladium gained 1.6% Thursday to $1,202.50 an ounce and is up 7.2% so far this week. Palladium decreased 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. Currently, the DG spot price is up $22.10 an ounce to $1227.00.
Spot platinum slipped $1.20 Thursday to $1,392.80 an ounce but is up 0.6% this week. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The DG spot price is currently up $12.30 an ounce to $1405.10.
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