Gold regains ground on bargain hunting early Friday, but still appears headed for its biggest weekly drop since February amid expectations of further interest rate hikes by the Federal Reserve. Palladium tumbled to the lowest level since May 2019, but has since climbed back above teh $1300 mark.
The yellow metal traded near the lowest level in more than three months as the dollar strengthened, making gold less attractive to investors as a financial asset. Speculation of a possible global economic downturn weighed on palladium, which is an industrial metal.
August gold dropped 1.1% Thursday to settle at $1,923.70 an ounce on Comex and is down 2.4% this week. Comex futures traded without a settlement Monday, as U.S. financial markets were closed for the Juneteenth holiday. Bullion retreated 0.9% in May after increasing 0.6% in April and 8.1% in March. The metal fell $2.40 in 2022. The August contract is currently up $17.20 (+0.89%) an ounce to $1940.90 and the DG spot price is $1937.30.
Spot palladium decreased 4.8% Thursday to $1,296.50 an ounce and is down 10% this week. Palladium fell 9.3% last month after rising 2% in April and 3.7% in March. Palladium lost 5.7% in 2022. The current DG spot price is up $9.40 an ounce to $1307.00.
Fed Chairman Jerome Powell told a House panel Wednesday that most Fed policymakers expect rates to rise further in the effort to combat inflation, which “has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go.” Powell testified before a Senate panel Thursday.
The Fed left its benchmark federal funds rate at 5.00% to 5.25% last week, its first pause after 10 consecutive rate increases to combat inflation, triggering speculation about whether the hikes were over or if there were more to come.
About 76.9% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at its July monetary policy meeting, while 23.1% expect it to keep rates unchanged.
The Fed has increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022.
In other economic news, the index of leading U.S. economic indicators fell for a 14th consecutive month in May, according to data released Thursday, and “continues to point to weaker economic activity ahead,” according to a statement from the Conference Board. “Rising interest rates paired with persistent inflation will continue to further dampen economic activity.”
U.S. weekly initial jobless claims held at 264,000 in the week ended June 17, but still the highest level since October 2021. The figure was also higher than economists forecast.
September Silver futures dropped 1.5% Thursday to settle at $22.67 an ounce on Comex. The most-active contract tumbled 6.9% so far this week. Silver decreased 6.5% in May after gaining 4.4% in April and 15% in March. It rose 3% in 2022. The September contract is currently up $0.065 (+0.29%) an ounce to $22.735 and the current DG spot price $22.56.
Spot platinum lost 2.6% Thursday to $930.30 an ounce. It’s dropped 6.2% this week. Platinum retreated 7.4% in May after adding 8.5% in April and 3.7% in March. Platinum surged 10% in 2022. Currently, the DG spot price is down $0.50 an ounce to $931.00.
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