Gold regains as Dollar stalls

Gold regains as Dollar stalls

Gold regains ground early Friday as the dollar stalls, but the yellow metal still heading for a quarterly decline amid speculation that the Federal Reserve will continue to keep interest rates high. Today’s inflation data gave gold a slight boost.

The personal consumption expenditures (PCE) price index (excluding food and energy) increased 0.1% for the month, per the Commerce Department, that’s lower than the 0.2% gain forecast. The 12-month basis matched the forecast of an annual core PCE increase of 3.9%. Consumer spending rose 0.4% on a current-dollar basis, down sharply from 0.9% in July. The DG spot price rose over $7 an ounce on the news.

Investors now look to the monthly U.S. jobs report, which the Fed also closely tracks, that is scheduled to come out next week unless its publication is derailed by a U.S. government shutdown.

The standoff between lawmakers over passage of legislation that would allow the U.S. government to continue operating from Oct. 1, the start of the federal fiscal year, provided some support for gold, a traditional hedge against uncertainty. There appeared to be no clear path to avert a shutdown early Friday. 

Front-month gold futures dropped 0.7% Thursday to settle at $1,878.60 an ounce on Comex, and the December contract is down 3.4% so far this week. Bullion is down 4.4% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 2.9% in 2023. The December contract is currently up $15.70 (+0.84%) an ounce to $1893.30 and the DG spot price is $1876.40.

Gold hovered near six-month lows Friday on the prospect that interest rates will be higher for longer to curb inflation. The speculation also positioned both the dollar and U.S. Treasury yields to post their best quarters in four. Increases in both are bearish for gold. 

About 86.7% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 13.3% expect it to raise rates another 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold. 

The Fed has raised rates by 5.25 percentage points since March 2022 to curb inflation. The central bank held its benchmark interest rate at 5.25% to 5.50% in September. An end to Fed rate hikes – or a pause – is considered bullish for gold. 

Front-month silver futures edged up 1.7 cents Thursday to settle at $23.74 an ounce on Comex, and the December contract is down 4.6% so far this week. Silver is down 8.4% this month after slipping 0.6% in August and gaining 8.5% in July. It’s down 5.4% in 2023. The December contract is currently up $0.899 (+3.95%) an ounce to $23.640 and the DG spot price is $23.39.

Spot palladium rallied 4.7% Thursday to $1,290.50 an ounce and has advanced 1.6% so far this week. Palladium is up 5.1% this month after sliding 5.3% in August and rising 3.6% in July. Palladium has plummeted 29% so far this year. The current DG spot price is up $0.50 an ounce to $1289.00.

Spot platinum rose 2.8% Thursday to $915.60 an ounce and but has lost 2.2% so far this week. Platinum is down 6.1% this month after advancing 1.7% in August and gaining 5.2% in July. Platinum is down 14% in 2023. The DG spot price is currently up $14.50 an ounce to $927.70.

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