Gold heads for monthly gain

Gold heads for monthly gain

Gold heads for monthly gain, getting an additional boost this morning on waning inflation news. The bullion is poised for its best month since July 2020.

One of the Fed’s favorite leading inflation indicators had positive signs this morning. February’s personal consumption expenditures price index rose 0.3% for the month, the Commerce Department reported Friday. That’s below the 0.4% forecast and lower than the 0.5% January increase. The news drove gold futures back up to the $2,000 an ounce mark.

The yellow metal surged in March because of the global banking crisis, which increased gold’s appeal to investors as a hedge against uncertainty. But the financial distress bolstered speculation that the Federal Reserve could pause its series of interest rate hikes to rein in inflation. Any pause or halt in rate hikes would be seen as supportive for gold.

June gold futures gained 0.7% Thursday to settle at $1,997.70 an ounce on Comex, though the front-month contract dropped 0.2% in the first four days of the week. Bullion is up 8.8% this month after decreasing 5.6% in February, its worst performance since June 2021. Gold is up 9.4% in the first quarter. The metal fell $2.40 in 2022. Prices have faced some resistance this week around the $2,000-an-ounce level. The June contract is currently down slightly, $2.40 (-0.12%) an ounce, to $1995.30 and the DG spot price is $1982.60.

In addition to the inflation report, investors will be closely watching for the U.S. monthly jobs report for March, which comes out in a week. Fed policymakers have said they track both the inflation and labor market statistics when determining monetary policy. 

The Fed has raised rates by 25 basis points twice this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. The federal funds rate is currently at 4.75% to 5.00%. 

About 52.5% of investors tracked by the CME FedWatch Tool are betting that the Fed will boost interest rates by 25 basis points at the Fed’s next policy meeting in May, while 47.5% anticipate the central bank will leave rates unchanged. 

Silver May futures gained 2.2% Thursday to settle at $23.99 an ounce on Comex, and the metal is up 2.8% so far this week. Silver has increased 14% in March after retreating 12% in February. It’s down 0.2% in the first quarter. It advanced 3% in 2022. The May contract is currently up $0.016 (+0.07%) an ounce to $24.005 and the DG spot price is $24.05.

Spot palladium rallied 2% Thursday to $1,494.50 an ounce, and it advanced 2.9% in the first four days of the week. Palladium has risen 3.8% so far this month after plummeting 14% in February. It’s down 17% this quarter. Palladium lost 5.7% in 2022. Currently, the DG spot price is up $7.90 an ounce to $1496.50.

Spot platinum gained 2% Thursday to $996.50 an ounce and is up 0.9% so far this week. Platinum has increased 3.4% this month after retreating 5.9% in February. It’s down 6.9% in the first quarter. Platinum surged 10% in 2022. The current DG spot price is down $5.80 an ounce to $991.10.

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