Gold holds gains near six-month high

Gold holds gains near six-month high

Gold holds gains near six-month high early Wednesday made during the previous session amid support from a weaker dollar and expectations that the Federal Reserve may be done raising interest rates.

Investors are awaiting further direction from the personal consumption expenditures price index, the Fed’s favorite inflation report, which is due out Thursday. Economic reports that will be closely watched Wednesday include U.S. third quarter GDP and the Beige Book report of the economic conditions in the Fed’s 12 regions. A strong GDP report Wednesday might indicate that the economy is resilient enough to withstand further rate hikes, which are bearish for gold. 

Front-month gold futures rose 1.3% Tuesday to settle at $2,060.20 an ounce on Comex, and the February contract has increased 1.8% so far this week. Bullion is up 3.3% this month after gaining 6.9% in October and falling 5.1% in September. The metal is up 13% in 2023. The February contract has ticked down $2.00 (-0.10%) an ounce to $2058.20 and the DG spot price is $2040.20.

The dollar dropped near a four-month low early Wednesday, making gold a more affordable investment for holders of other currencies. 

The PCE index on Thursday, along with U.S. weekly initial jobless claims, will be closely watched for signals on whether the Fed is done with its series of rate hikes. The Fed has boosted interest rates by 5.25 percentage points since March 2022 to curb inflation to the 2% level. The Fed kept interest rates unchanged at 5.25% to 5.50% earlier this month. 

Fed Chair Jerome Powell is scheduled to speak Friday, and his comments are also likely to be closely tracked for signals on further central bank action. The key first-of-the-month U.S. manufacturing report from the Institute for Supply Management will also be released Friday, providing a snapshot of the state of the economy.  

The CME FedWatch Tool shows that 98.5% of the investors it tracks are betting that the Fed will keep its federal funds rate unchanged Dec. 13, while 1.5% are expecting a 25 basis point increase. 

Front-month silver futures increased 1.1% Tuesday to settle at $25.30 an ounce on Comex, and the March contract has rallied 2.5% so far this week. Silver is up 10% this month after increasing 2.2% in October and decreasing 9.5% in September. It’s up 5.3% in 2023. The March contract is currently up $0.088 (+0.35%) an ounce to $25.390 and the DG spot price is $25.07.

Spot palladium gained 0.3% Tuesday to $1,070.00 an ounce and has decreased 1.3% so far this week. Palladium is down 5.9% this month after dropping 10% in October and rising 3% in September. Palladium has plummeted 41% so far this year. The current DG spot price is down $34.80 an ounce to $1036.50.

Spot platinum rose 2.8% Tuesday to $949.10 an ounce and is up 1.1% so far this week. Platinum is up 0.7% this month after gaining 3.5% in October and declining 6.6% in September. Platinum is down 11% in 2023. The DG spot price is currently down $14.10 an ounce to $937.00.

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