Gold Inches Up on Softer Dollar

Gold Inches up on softer dollar

Gold inches up in Monday morning trading on softer dollar and Treasury yields as investors awaited the release of the key U.S. manufacturing figures for September for further direction.

A softer dollar bolstered prices while the prospect of further aggressive moves on monetary policy by the world’s central banks to rein in soaring inflation kept a lid on the gains.

Gold benefitting from nervous investors seeking safe havens as the markets head into October, a historically rocky financial month.

Inflation was stronger than analysts had expected in August, despite interest-rate hikes of 300 basis points from the Federal Reserve already this year. The Fed’s favorite inflation measure, the personal consumption expenditures price index – excluding food and energy – rose 0.6% in August from July after remaining flat in the prior month. Investors surveyed by Dow Jones had forecast a 0.5% increase. Year on year, the so-called core PCE rose 4.9%, exceeding estimates for 4.7%

Front-month gold futures rose 1% last week to settle at $1,672.00 an ounce on Comex after rising 0.2% Friday. It was the first weekly rally in three weeks. Bullion fell 3.1% in September and 7.5% in the third quarter. The metal is down 8.6% this year. Currently, the December contract is up $2.40 (+0.14%) an ounce to $1674.40 and the DG spot price is $1668.40.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15% Friday to 939.70 metric tons, according to Reuters.

The Institute for Supply Management’s closely watched manufacturing data for September will be released Monday, and investors will also await the critical monthly jobs report on Friday. The U.S. employment report will indicate whether the rate increases are having any negative impact on the labor market. 

The Fed increased rates by 75 basis points each in June, July, and September. Higher interest rates are bearish for gold because they make the yellow metal less attractive as an alternate investment. So does a strong dollar, which has gotten a boost from the aggressive monetary policy. 

Investors are betting there’s a 52% chance of a 75-basis-point rate increase at the next meeting of Fed policymakers in early November, with 48% projecting a 50-basis-point hike, according the CME FedWatch Tool

Front-month silver futures gained 0.7% last week to settle at $19.04 an ounce on Comex after the December contract rose 1.8% Friday. Silver advanced 6.5% in September and fell 6.5% in the third quarter. It’s down 18% this year. The current December contract is up $0.701 (+3.68%) an ounce to $19.740 and the DG spot price is $19.82.

Spot palladium increased 2.5% Thursday to $2,240.00 an ounce and is up 6.9% so far this week.  Palladium is up 7.4% this month after retreating 3.3% in August and rising 9.9% in July. It advanced 14% so far this quarter and dropped 22% in 2021. The DG spot price is currently up $19.80 an ounce to $2224.00.

Spot platinum lost 0.8% Thursday to $871.40 an ounce and rose 0.5% in the first four days of the week. Platinum is up 2.4% this month after tumbling 6.1% in August and decreasing 0.3% in July. It fell 4.2% so far this quarter and 9.4% last year. The DG spot price is currently up $18.70 an ounce to $890.80.

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