Gold jumps back over $4300 an ounce after swinging between gains and losses early Monday following a sharp selloff late last week which dropped from a record-breaking rally.
The precious metal continued to attract haven investors amid geopolitical and economic uncertainty but eased back at the end of last week on signs of thawing tensions between the U.S. and China on their trade standoff. Silver, which rallied last week on a short squeeze in London, also fluctuated over night.
Investors looked to monetary policy for direction. The closely watched consumer price index, which was suspended because of the U.S. government shutdown, is scheduled to come out Friday, shortly before Federal Reserve policymakers are set to meet next week. They are almost overwhelmingly expected to cut interest rates again following a rate reduction in September.
December gold futures rose 5.3% last week to settle at $4,213.30 an ounce on Comex, though the front-month contract lost 2.1% Friday. Bullion surged 10% in September, the most in six months, after adding 5% in August and gaining 1.2% in July. It’s up 60% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $113.20 (+2.69%) an ounce to $4326.50 and the DG spot price is $4299.80.
HSBC on Friday forecast that gold will hit $5,000 an ounce in 2026, Reuters reported, citing elevated risks.
Bullish factors Monday include the U.S. government shutdown – which is in its 17th day – also added to uncertainty driving investors to precious metals as did concerns about credit risks last week involving two regional lenders. A Fed rate cut would also be considered bullish for gold, which becomes a more attractive financial asset when rates decline.
Almost 99% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points next week, with the rest expecting the central bank to keep rates unchanged. 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.
The Fed lowered interest rates by 25 basis points in September to 4.00% to 4.25%.
But many investors see the stage set for a pullback in precious metals prices this week as investors take profits.
Separately, U.S. President Donald Trump said Sunday on Fox that he’s “not looking to destroy China” amid the standoff. He added that the U.S. will “do fine” as China responds to his tariffs.
Front-month silver futures surged 6.1% last week to settle at $50.10 an ounce on Comex, though the December contract tumbled 6% Friday. Silver rose 15% last month, the biggest monthly rally in two and a half years, after climbing 11% in August and gaining 1.5% in July. It rose 21% in 2024. The December contract is currently up $0.991 (+1.98%) an ounce to $51.095 and the DG spot price is $52.01.
Spot palladium gained 4.5% last week to $1,494.00 an ounce, though it slid 6.8% Friday. Palladium rose 14% in September after declining 7.8% in August and climbing 8.8% in July. Palladium dropped 17% last year. Currently, the DG spot price is down $6.30 an ounce to $1489.00
Spot platinum increased 0.7% last week to $1,619.20 an ounce but fell 5.7% Friday. It increased 15% in September after rising 5.9% in August and dropping 3.9% in July. Platinum lost 8.4% in 2024. The DG spot price is currently up $11.80 an ounce to $1628.30.
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