Gold heads for its second consecutive weekly loss as investors awaited the release of the Federal Reserve’s favorite inflation report for further direction. Meanwhile, platinum surged to the highest level since 2014 on supply concerns which also spurred palladium. Platinum has lost some of these gains, but is still firmly over $1300 an ounce.
Gold’s rally fizzled this week as tensions in the Middle East eased and investors turned more attention to the economy. The truce between Israel and Iran appeared to hold, reducing fears of a broader Mideast war that could send haven investors into the precious metals market. Investors will be closely watching the release of the personal consumption expenditures price index Friday with May data for signals on the Fed’s next moves on monetary policy.
Separately, platinum and palladium surged amid stockpiling by the U.S. and China to protect against possible trade disruptions. Platinum has moved into backwardation, a market structure that indicates tight supply conditions. It means that forward prices are trading significantly below current spot prices.
August gold futures rose 0.2% Thursday to settle at $3,348.00 an ounce on Comex, and the front-month contract dropped 1.1% in the first four days of the week. Bullion is up 1% this month after slipping 0.1% in May and increasing 5.4% in April. It’s up 27% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently down $74.50 (-2.23%) an ounce to $3273.50 and the DG spot price is $3264.60.
Spot platinum advanced 6% Thursday to $1,429.50 an ounce and is up 12% so far this week. It’s up 35% this month after surging 8.6% in May and retreating 3.1% in April. Platinum lost 8.4% in 2024. Currently, the DG spot price is down $77.20 an ounce to $1335.80.
Spot palladium rose 7.2% Thursday to $1,146.50 an ounce, and it climbed 8.4% in the first four days of the week. Palladium is up 18% this month after advancing 2.8% in May and falling 4.9% in April. Palladium dropped 17% last year. The DG spot price is currently down $12.10 an ounce to $1130.50.
In economic news, the final report of first-quarter U.S. GDP came out Thursday and showed the economy shrank more than previously thought at the beginning of the year as growth contracted for the first time in three years. GDP slid at an annual rate of 0.5% from January through March, according to Commerce Department data. The first read for the quarter estimated 0.3% decline in April, while the second showed a 0.2% dip.
Separately, U.S. weekly initial jobless claims for last week fell to a five-week low.
The Fed has said it watches inflation and the labor market when setting monetary policy. Last week, the central bank kept interest rates unchanged at 4.25% to 4.50%. Policymakers signaled that the central bank is still factoring two interest rate cuts this year. Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in September, not at policymakers’ next meeting in July.
The Fed reduced rates three times in 2024 but has held them steady this year. 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 futures gained 1.3% Thursday to settle at $36.92 an ounce on Comex, and the most-active September contract rallied 1.6% in the first four days of the week. Silver is up 12% this month after adding 0.6% in May and dropping 5.2% in April. It gained 21% in 2024. The September contract is currently down $0.859 (-2.33%) an ounce to $36.065 and the DG spot price is $35.98.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.