Gold poised for weekly gain

Gold poised for weekly gain

Gold slips early Friday on stronger dollar, but still poised for a weekly gain as investors anticipated a pause in interest rate hikes at next week’s Federal Reserve monetary policy meeting.

Holding rates unchanged – or cutting them is considered bullish for gold, as interest rate hikes make the yellow metal less attractive to investors. The Fed has raised rates by 25 basis points three times this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 in an effort to curb inflation. The federal funds rate is currently at 5.00% to 5.25%. 

August gold futures rose 1% Thursday to settle at $1,978.60 an ounce on Comex, and the front-month contract gained 0.5% in the first four days of the week. Bullion retreated 0.9% in May after increasing 0.6% in April and 8.1% in March. The metal fell $2.40 in 2022. The August contract is currently down $0.50 (-0.03%) an ounce to $1978.10 and the DG spot price is $1963.50.

The U.S. weekly initial jobless claims report Thursday reinforced the case for a pause in rate hikes in June. Applications for unemployment payments rose to their highest level since October 2021 in a sign that the labor market is tightening. Fed policymakers have indicated that they closely follow both labor market data and inflation when determining monetary policy. 

A last inflation report, the consumer price index for May, is scheduled for release on June 13, the day before the policy decision. U.S. inflation measured by the personal consumption expenditures price index, the Fed’s favorite inflation measure, bounced higher in April. 

About 74.8% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep interest rates unchanged at the next meeting June 14, while 25.2% expect the central bank to raise rates by another 25 basis points. But the outlook for the July and September Fed policy meetings. Most investors are betting on a rate hike of either 25 or 50 basis points at those two meetings. 

July silver futures rallied 3.5% Thursday to settle at $24.35 an ounce on Comex, and the front-month contract climbed 2.5% in the first four days of the week. Silver decreased 6.5% in May after gaining 4.4% in April and 15% in March. It rose 3% in 2022. The July contract is currently down $0.023 (-0.09%) an ounce to $24.325 and the DG spot price is $24.27.

Spot palladium decreased 2.8% Thursday to $1,368.50 an ounce and has retreated 3.9% this week. Palladium fell 9.3% last month after rising 2% in April and 3.7% in March. Palladium lost 5.7% in 2022. Currently, the DG spot price is down $37.30 an ounce to $1346.00.

Spot platinum fell 0.8% Thursday to $1,018.70 an ounce, though it’s up 1% so far this week. Platinum retreated 7.4% in May after adding 8.5% in April and 3.7% in March. Platinum surged 10% in 2022. The DG spot price is currently down $7.30 an ounce to $1010.60.

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