Gold Rally Stalled By Dollar

Gold Rally Stalled by Dollar

Gold rally stalled by rising dollar. The bullion traded near three-week highs early Wednesday but then the dollar regained the high ground. Gold slipped further on this morning’s positive jobs numbers.

Businesses added 208,000 jobs for September, leaping over the forecast of 200,000 and far ahead of the upwardly revised August number of 185,000 jobs, according to ADP. Gold slipped a bit more on the data.

The yellow metal registered its largest daily percentage gain since March on Monday amid investor speculation that the Federal Reserve may ease up on its aggressive monetary policy to rein in inflation if more economic reports begin to point to a softening of the labor market and the broader economy. U.S. manufacturing grew at it slowest pace in two and a half years in September, a report showed Monday.

The dollar index posted its biggest drop since March 2020 overnight, as investors awaited the ADP employment data for September on Wednesday and the U.S. monthly jobs report from the Labor Department on Friday. 

Front-month gold futures rose 1.7% Tuesday to settle at $1,730.50 an ounce on Comex. It gained 3.5% in the first two days of the week. Bullion fell 3.1% in September and 7.5% in the third quarter. The metal is down 5.4% this year. The December contract is currently down $13.4 (-0.77%) an ounce to $1717.10 and the DG spot price is $1704.10.

The Institute for Supply Management’s manufacturing PMI dropped to 50.9 in September, the lowest reading since May 2020, which “reflects companies adjusting to potential future lower demand,” according to Monday’s report. The figure was 52.8 in August. Figures above 50 indicate expansion. Manufacturing accounts for about 11% of the U.S. economy. 

The slowdown may indicate that 300 basis points in Fed interest rate increases so far this year are starting to affect the economy. Rates went up by 75 basis points each in June, July, and September, and all eyes are now turning to November as the central bank is forced to balance its quest to curb runaway inflation with the possibility of sending the economy into a recession.

Inflation was stronger than analysts had expected in August, with the Fed’s favorite inflation measure, the personal consumption expenditures price index – excluding food and energy – rising 0.6% from July after remaining flat in the prior month, according to data released last week. 

Investors are betting there’s a 66.8% chance of a 75-basis-point rate increase at the next meeting of Fed policymakers in early November, with 33.2% projecting a 50-basis-point hike, according the CME FedWatch Tool.

Front-month silver futures gained 2.5% Tuesday to settle at $21.10 an ounce on Comex. The December contract rose 11% in the first two days of the week. Silver advanced 6.5% in September and fell 6.5% in the third quarter. It’s down 10% this year. The current DG spot price is down $98.20 to $2247.00. The December contract is currently down $0.939 (-4.45%) an ounce to $20.160 and the DG spot price is $20.06.

Spot palladium increased 3.65% Tuesday to $2,339.50 an ounce and is up 5.9% so far this week.  Palladium gained 5.9% last month and 13% in the third quarter. It’s up 22% in 2022. The DG spot price fell #21.70, currently $919.00.

Spot platinum advanced 3.2% Tuesday to $938.50 an ounce, and it’s up 7.5% so far this week. Platinum rose 2.6% in September. It fell 4% in the third quarter and is down 3.6% this year.

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