Gold Little changed awaiting Fed

Gold Little changed awaiting Fed

Gold was little changed early Wednesday with investors awaiting the release of the latest monetary policy statement from the Fed later today for further direction.

While the central bank isn’t expected to cut interest rates for months, it’s still expected to do so this year. So investors will be paying close attention to comments from Chairman Jerome Powell and the statement issued at the end of the meeting for clues about the timeline. 

Front-month gold futures fell 0.2% Tuesday to settle at $2,159.70 an ounce on Comex, and the most-active April contract slipped $1.50 in the first two days of the week. Bullion dropped 0.6% in February after declining 0.2% in January and gaining 0.7% in December. The metal rose 13% in 2023. The April contract is currently down $5.50 (-0.25%) an ounce to $2154.20 and the DG spot price is $2154.60.

Most investors are now expecting rate cuts to begin in June or July. The central bank has raised interest rates by 5.25 percentage points since March 2022 in an effort to cut inflation, but kept rates unchanged at 5.25% to 5.50% at its last meeting. Continued high interest rates would be considered bearish for the yellow metal, making it a less attractive asset for investors. 

About 94.1% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates unchanged in May, while 5.9% expect a 25 basis point cut. 

The Bank of Japan on Tuesday ended the world’s last negative interest rate policy. The Bank of England has a rate decision Thursday. 

The Fed closely tracks both inflation and labor market data when determining monetary policy. 

Two inflation reports came in hotter than expected last week. The core U.S. consumer price index, the cost of goods excluding volatile food and energy prices, came in above forecasts for the second consecutive month, while the producer price index, which measures wholesale prices, accelerated at a faster-than-expected pace of 0.6%, according to data released by the U.S. Bureau of Labor Statistics. 

In upcoming economic news, U.S. Conference Board leading index, existing home sales and initial jobless claims data are due out Thursday. Atlanta Fed President Raphael Bostic is scheduled to speak Friday.

Front-month silver futures fell 0.5% Tuesday to settle at $25.14 an ounce on Comex after the May contract retreated 1% in the first two days of the week. Silver lost 1.2% in February after falling 3.8% in January and dropping 6.1% in December. It ticked up 0.2% in 2023. The May contract is currently down $0.110 (-0.44%) an ounce to $25.025 and the DG spot price is $25.01.

Spot palladium decreased 4% Tuesday to $1,002.00 an ounce and dropped 8.6% so far this week. Palladium fell 4.6% in February after tumbling 11% in January and advancing 8.6% in December. Palladium plummeted 38% last year. Currently, the DG spot price is up $5.10 an ounce to $1008.50.

Spot platinum declined 2.4% Tuesday to $902.20 an ounce and has fallen 4.7% so far this week. Platinum decreased 4.9% in February after falling 8% in January and rising 8.1% in December. Platinum dropped 6.8% in 2023. The DG spot price is currently down $3.40 an ounce to $901.70.

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.