Gold rebounds from one-month lows

Gold rebounds from one-month lows

Gold rebounds from one-month lows, edging up early Wednesday amid weakness in the dollar and bond yields ahead of the latest inflation report. 

Investors are awaiting further direction from the consumer price index data due out Thursday. The report will be closely watched to determine how much impact the Federal Reserve’s cycle of interest rate increases has had in reducing inflation – and what the central bank should do next. If inflation slows more than expected, it may trigger a pause or end to the rate hikes, and that would be considered bullish for gold. The metal becomes less attractive to investors when rates go up. 

Front-month gold futures fell 0.5% Tuesday to settle at $1,959.90 an ounce on Comex, and the December contract is down 2% this week. Bullion rose 4.1% in July after losing 2.7% in June and retreating 0.9% in May. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022.  The current December contract is slightly down $1.80 (-0.09%) an ounce to $1958.10 and the DG spot price is $1924.10.

About 86.5% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in September at 5.25% to 5.50%. Just 13.5% expect it to raise rates another 25 basis points. Most investors tracked by the tool are betting that it will then hold at that rate at the remaining meetings this year. The central bank has raised rates by 5.25 percentage points since March 2022 in an effort to rein in inflation.

Gold, a traditional hedge against uncertainty, also got a boost after Moody’s downgraded the credit ratings of 10 regional U.S. lenders and put six others on notice that they are under review. The move triggered renewed concerns about the state of the U.S. economy, echoing a series of bank defaults earlier this year. 

September silver futures lost 1.8% Tuesday to settle at $22.81 an ounce on Comex. The most-active contract is down 6.9% so far this week. Silver gained 8.5% in July after dropping 2.4% in June and decreasing 6.5% in May. It retreated 4.2% in the first half of the year after rising 3% in 2022.  The September contract is currently down $0.042 (-0.18%) an ounce to $22.765 and the DG spot price is $22.73.

Spot palladium decreased 1.2% Tuesday to $1,237.50 an ounce and has lost 2.1% this week.  Palladium rose 3.6% in July after falling 9.5% in June and tumbling 9.3% in May. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. Currently, the DG spot price is up $12.90 an ounce to $1251.00.

Spot platinum slid 2.2% Tuesday to $908.70 an ounce and is down 3.5% so far this week. Platinum gained 5.2% in July after falling 9.3% in June and retreating 7.4% in May. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently down $9.00 an ounce to $899.20.

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