Gold Losing Ground on Fed Comments

Gold Losing Ground on Fed Comments

Gold losing ground on Fed comments after clinging to support from an easing dollar. The yellow metal is looking at a weekly dip following indications from U.S. Federal Reserve officials that more interest rate hikes are on the horizon.

This morning, Boston Federal Reserve President Susan Collins expressed confidence that the Fed can tame inflation without seriously damaging employment. “By raising rates, we are aiming to slow the economy and bring labor demand into better balance with supply,” Collins told a Boston Fed conference on the labor market. Gold wavered above and below $1762 an ounce on the news.

Prices for the yellow metal surged last week after the October consumer price index report showed inflation growth was slowing

Front-month gold futures slipped 10 cents Tuesday to settle at $1,776.80 an ounce on Comex. The December contract gained 0.4% in the first two days of the week. Bullion fell 1.9% in October, its seventh straight month of declines. The metal is down 2.8% this year. Currently, the December contract is up $5.2 (+0.29%) an ounce to $1782.00 and the DG spot price is $1779.70. The December contract is currently down $0.6 (-0.03%) an ounce to $1762.40 and the DG spot price is $1757.20

Yesterday, St. Louis Fed President James Bullard sparked concern in the markets when he said the funds rate could need to climb as high as 7%. Other Fed officials also said they see more hikes and expect rates to remain elevated. Gold responded by dropping more than $10 an ounce.

The Fed has increased interest rates by 375 basis points this calendar year. There have been 75-basis-point increases each in June, July, September, and November, and the federal funds rate is now at 3.75% to 4%. High rates are typically bearish for gold because they make the yellow metal less attractive than other assets. 

Investors will be watching the release of existing home sales data and leading economic indicators later this morning for further direction.

Investors are betting there’s an 80.6% chance Fed policymakers will raise interest rates by 50 basis points in December, compared with 56.8% early last week. About 19.4% of investors tracked by the CME FedWatch Tool are projecting a 75-basis-point hike.

Front-month silver futures dropped rose Thursday to settle at $20.975 an ounce on Comex. The December contract retreated 0.7% in the first two days of the week. Silver advanced 0.4% in October, its second consecutive monthly increase. It’s down 7.9% this year. The December contract is currently up $0.070 (+0.33%) an ounce to $21.045 and the DG spot price is $21.11.

Spot palladium decreased 1.5% Thursday to $2,033.00 an ounce and is down 3.4% this week. Palladium declined 15% last month. It’s up 9.8% in 2022. Currently, the DG spot price is down $52.20 an ounce to $1982.50.

Spot platinum decreased 1.8% Thursday to $992.10 an ounce. It’s down 4.2% so far this week. Platinum gained 7.3% in October. It’s up 4.4% this year. The current DG spot price is slightly down, $1.80 an ounce to $980.70

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