Gold rebounded after two weeks of losses

Gold rebounded after two weeks of losses

Gold rebounded early Monday after posting two back-to-back weeks of losses. The yellow metal edged higher on renewed optimism that the economy is gradually slowing, not heading for a hard collapse because of high inflation and slow growth. The sentiment was fueled by the April U.S. jobs report, which came out weaker than expected on Friday, and comments from Federal Reserve officials. 

Persistently high inflation caused the Fed to keep interest rates unchanged at 5.25% to 5.50% last week, with forecasts for a rate cut moving to later in the year. But the weaker jobs report and other data could accelerate that timeline. High rates are traditionally bearish for gold so signs that the Fed may cut rates sooner rather than later would be bullish. Gold also continued to see strength from haven demand related to the conflicts in the Middle East and Ukraine. 

Front-month gold futures fell 1.6% last week to settle at $2,308.60 an ounce on Comex after the most-active June contract lost $1 Friday. Bullion gained 2.9% in April after rising 8.9% in March – the biggest monthly gain in more than three years – and dropping 0.6% in February. The metal rose 13% in 2023. The June contract is currently up $25.50 (+1.10%) an ounce to $2334.10 and the DG spot price is $2332.40.

U.S. jobs growth slowed to 175,000 positions last month, the lowest increase since October, Labor Department data showed. The figure was well below the upwardly revised gain of 315,000 in March. 

The Fed closely watches both labor market and inflation data when setting monetary policy. The Fed’s favorite inflation measure – the personal consumption expenditures price indexsurpassed economists’ estimates for both the headline and core numbers for March. The Fed’s goal is for 2% inflation. 

About 91.5% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates unchanged in June, while 8.5% expect a 25 basis point cut. More than 60% of investors also expect the Fed to hold rates at current levels in July. Most investors don’t expect a rate cut until September. The Fed has raised rates by 5.25 percentage points since March 2022 in an effort to cut inflation.

July silver futures decreased 3.1% last week to settle at $26.69 an ounce on Comex after the front-month contract fell 0.5% Friday. Silver rose 7% in April after gaining 8.9% in March and losing 1.2% in February. It ticked up 0.2% in 2023. The July contract is currently up $0.905 (+3.39%) an ounce to $27.595 and the DG spot price is $27.47.

Spot palladium dropped 1% last week to $955.00 an ounce, though it rose 0.6% Friday. Palladium declined 5.9% last month after advancing 7.7% in March and falling 4.6% in February. Palladium plummeted 38% last year. Currently, the DG spot price is up $37.10 an ounce to $993.50.

Spot platinum advanced 4.5% last week to $961.90 an ounce after ticking up 0.2% Friday. Platinum gained 3.1% in April after rising 3.3% in March and decreasing 4.9% in February. Platinum dropped 6.8% in 2023. The DG spot price is currently up $7.10 an ounce to $969.30.

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