Gold traded near a one-month low early Wednesday and looks headed for a fifth monthly drop on the prospect of higher interest rates.
Private payrolls showed anemic growth for August. Gold has shown little reaction to the ADP report that shows 132,000 new jobs for the month, a deceleration from the 270,000 gain in July and a far cry from the forecasted number of 300,000. The report also gave inflation worries a boost, showing annual pay up 7.6% for the month.
“We’re going to need to have restrictive policy for some time,” New York Federal Reserve President John Williams told the Wall Street Journal. “This is not something we’re going to do for a very short period and then change course.”
His comments echoed remarks Friday by Fed Chairman Jerome Powell, who indicated that the central bank will continue to act aggressively to fight four-decade highs in inflation.
Front-month gold futures fell 0.8% Tuesday to settle at $1,736.30 an ounce on Comex. The December contract also decreased 0.8% in the first two days of the week. Bullion is down 2.6% so far this month after dropping 1.4% in July. The metal retreated 3.5% in 2021. The current December contract is down $10.60 (-0.61%) an ounce to $1725.70 and the DG spot price is $1717.50.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.44% Tuesday to 976.26 metric tons, Reuters reported.
Investors are now betting there’s a 72.5% chance of a 75-basis-point increase next month, with just 27.5% projecting a 50-basis-point rate hike in September, according the CME FedWatch Tool. A week ago, 53% of investors were betting on a 50 basis point increase. The Fed raised rates by 75 basis points each in June and July.
The market is awaiting a series of U.S. jobs reports, including the key U.S. employment report for August, set for release on Friday, for signals on the state of the economy and further direction. There has been some concern by investors that the aggressive Fed moves will hurt economic growth and could lead to a recession. But recent positive economic data have refuted many of those assumptions.
U.S. jobs openings and consumer confidence both beat forecasts in reports released Tuesday, bolstering speculation that the Fed is clear to announce another big hike without damaging the economy. The Fed’s preferred inflation measure, the personal consumption expenditures price index, on Friday showed price pressures eased in July, though they remained elevated.
The Cleveland Fed’s Loretta Mester and the Atlanta Fed’s Raphael Bostic are scheduled to speak Wednesday, and the ADP employment report for August and Chicago manufacturing PMI are due out. Thursday brings the key U.S. manufacturing report and weekly initial jobless claims, with the week ending with the monthly U.S. employment report Friday.
Front-month silver futures retreated 2.1% Tuesday to settle at $18.29 an ounce on Comex. The December contract dropped 2.9% in the first two days of the week. Silver is down 9.5% this month after slipping 0.8% in July. It retreated 12% in 2021. Silver prices are tied to industrial demand. The December contract is currently down $0.292 (-1.60%) an ounce to $17.995 and the DG spot price is $18.22
Spot palladium slipped 2.4% Tuesday to $2,102.00 an ounce. It’s down 2% this week. Palladium is down 2.6% in August after rising 9.9% in July. It retreated 22% in 2021. Currently, the DG spot price is down $17.80 an ounce to $2090.00.
Spot platinum fell 2.5% Tuesday to $853.90 an ounce. It dropped 2.2% so far this week. Platinum has tumbled 5.8% in August after slipping 0.3% in July. It dropped 9.4% last year. The DG spot price is currently up $0.50 an ounce to $857.60.
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