Gold poised for first weekly gain in three

Gold poised for first weekly gain in three

Gold withdraws a bit from early morning gains on profit-taking, but still poised for first weekly gain in three weeks on speculation that the Federal Reserve may be able to pause or end its series of interest rate hikes. Gold scales two-week high on expected Fed pause.

New inflation reports this week boosted bolstered the outlook for a rate pause, pressuring the dollar and Treasury yields and supporting gold prices. Uncertainty over the war in the Middle East also sent haven investors to the yellow metal.

Front-month gold futures rose 1.2% Thursday to settle at $1,987.30 an ounce on Comex, and the December contract advanced 2.6% in the first four days of the week. Bullion gained 6.9% in October after falling 5.1% in September and dropping 2.2% in August. The metal is up 8.8% in 2023. Th December contract is currently down $2.10 (-0.11%) an ounce to $1985.20 and the DG spot price is $1982.70.

U.S. producer prices fell by the most in three and a half years in October, according to data released Wednesday by the Bureau of Labor Statistics. The report came a day after the so-called core consumer price index, which excludes volatile food and energy prices, came in below expectations for October. 

About 99.8% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in December, while just 0.2% expect it to raise rates by 25 basis points. That’s a shift from 90.9% and 9.1% a week earlier.  

Interest rate hikes are typically considered bearish for gold because they make the precious metal less attractive than other assets. Conversely, a pause or cut in interest rates would be bullish for the yellow metal. 

The Fed has boosted interest rates by 5.25 percentage points since March 2022 to curb inflation to the 2% level. The Fed kept interest rates unchanged at 5.25% to 5.50% earlier this month. The central bank has raised interest rates only once since May. 

Front-month silver futures increased 1.7% Thursday to settle at $23.93 an ounce on Comex, and the December contract rallied 7.4% in the first four days of the week. Silver increased 2.2% last month after decreasing 9.5% in September and slipping 0.6% in August. It’s down 0.5% in 2023. The December contract is currently down $0.103 (-0.43%) an ounce to $23.830 and the DG spot price is $23.78.

Spot palladium advanced 0.2% Thursday to $1,054.00 an ounce, and it advanced 7.4% so far this week. Palladium dropped 10% in October after rising 3% in September and sliding 5.3% in August. Palladium has plummeted 42% so far this year. The current DG spot price is up $0.90 an ounce to $1060.50.

Spot platinum rose 80 cents Thursday to $904.40 an ounce and increased 6.4% so far this week. Platinum gained 3.5% in October after declining 6.6% last month and advancing 1.7% in August. Platinum is down 15% in 2023. The DG spot price is currently down $0.50 an ounce to $905.30.

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