Gold rallies early Wednesday extending gains to reach a new consecutive record high in as many days on speculation that the Fed will begin its long-awaited interest rate cuts in September.
The yellow metal traded above $2,400 an ounce and topped its previous high set in May after signs that inflation is slowing. Fed Chairman Jerome Powell said Monday that after the recent inflation data, policymakers have greater confidence that inflation is approaching the Fed’s 2% goal. The Fed closely watches both inflation and labor market data when determining monetary policy. Interest rate reductions are seen as bullish for gold, which becomes a more attractive alternate investment when rates go down.
In upcoming economic news the Fed’s Beige Book economic report from its 12 regional banks comes out Wednesday. So do U.S. housing starts and industrial production data. And the European Central Bank is scheduled to announce a monetary policy decision Thursday.
August gold futures rose 1.6% Tuesday to settle at $2,467.80 an ounce on Comex, and the most-active contract gained 2% in the first two days of the week. Bullion fell 0.3% last month after gaining 1.9% in May and 2.9% in April. The metal rose 13% in 2023. The August contract is currently up $15.30 (+0.62%) an ounce to $2483.10 and the DG spot price is $2477.40.
While Powell signaled that U.S. inflation is heading in the right direction, the International Monetary Fund on Tuesday warmed that inflation in many major economies is taking longer than expected to cool, and that could affect global growth. But in its update to the World Economic Outlook, the IMF raised its global economic growth forecast for 2025 by 0.1 percentage point to 3.3%, though it left this year’s unchanged at 3.2%.
The CME FedWatch Tool shows 95.3% of the investors tracked are betting that the Fed will keep rates unchanged this month. But 98.1% expect the central bank to start cutting in September, with most anticipating a 25 basis point cut. The Fed kept interest rates unchanged again in June. The Fed has kept interest rates steady at 5.25% to 5.50% for about a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Separately, U.S. retail sales data that came out Tuesday were stronger than expected.
September silver futures advanced 1.7% Tuesday to settle at $31.46 an ounce on Comex, and the front-month contract increased 1% in the first two days of the week. Silver fell 2.9% last month after surging 14% in May and rising 7% in April. It ticked up 0.2% in 2023. The September contract is currently down $0.313 (-0.99%) an ounce to $31.145 and the DG spot price is $30.95.
Spot palladium gained 1.2% Tuesday to $968.00 an ounce but slid 1.4% so far this week. Palladium rallied 8.1% last month after declining 5.1% in May and losing 5.9% in April. Palladium plummeted 38% last year.The DG spot price is currently up $2.70 an ounce to $969.50.
Spot platinum edged up 0.2% Tuesday to $1,006.60 an ounce and is up 40 cents so far this week. Platinum fell 3.7% last month after advancing 10% in May and 3.1% in April. Platinum dropped 6.8% in 2023. The current DG spot price is up $14.20 an ounce to $1019.30.
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