Gold rises early Wednesday ahead of Fed, and jobs reports. The bullion was poised to cap its biggest monthly gain since March amid speculation that the Federal Reserve will clearly indicate that interest rate cuts are imminent in its policy statement due out in the afternoon. Safe haven impulses driven by the latest violence in the Middle East is also giving the yellow metal a boost.
U.S. payrolls losing some steam in July, per this morning’s report from ADP. Private payrolls increased by just 122,000 in July, less than the forecasted 150,000, the slowest pace in seven months. The numbers are also below June’s upwardly revised 155,000 new jobs. Wages for those who stayed in their jobs increased 4.8% from a year ago, the smallest increase since July 2021. Gold shrugged off this latest jobs data.
The Fed, which concludes a two-day meeting Wednesday, has kept interest rates steady at 5.25% to 5.50% for about a year after raising them by 5.25 percentage points since March 2022 to rein in inflation. But recent economic reports have bolstered speculation that a long-awaited rate cut could come in September. An interest rate reduction would be considered bullish for gold, which becomes a more attractive alternate investment when rates go down.
The private payrolls report from ADP comes out Wednesday with July data and may influence market speculation. The key U.S. monthly jobs report comes out Friday, and weekly initial jobless claims are due Thursday. The Fed closely watches both inflation and labor market data when determining monetary policy.
Front-month gold futures rose 1.1% Tuesday to settle at $2,451.90 an ounce on Comex, and the most-active December contract gained 1% in the first two days of the week. Bullion is up 4.8% so far this month after falling 0.3% in June and gaining 1.9% in May. The metal rose 13% in 2023. The December contract is currently up $15.90 (+0.65%) an ounce to $2467.80 and the DG spot price is $2424.80.
In physical news, the World Gold Council said Tuesday that India’s gold demand fell 5% from a year earlier in the quarter ended in June, but said demand should improve in the second half of the year because of steep reduction in import taxes, according to Reuters.
In economic news, U.S. consumer confidence data for July showed that Americans had a better outlook about the near future though their assessment of current conditions weakened. The data was released Tuesday by the Conference Board.
Along with the policy statement after Wednesday’s Fed meeting, investors will be parsing subsequent remarks by Chairman Jerome Powell for further indicators on the central bank’s thinking. Monetary policy decisions are also due this week from the Bank of Japan and the Bank of England.
The CME FedWatch Tool shows 96.9% of the investors tracked are betting that the Fed will keep rates unchanged Wednesday. But all expect the central bank to start cutting in September, with a huge majority anticipating a 25 basis point reduction.
Last week, The Fed’s favorite inflation measure, the personal consumption expenditures price index, moved closer to the central bank’s 2% target for inflation. It was up 2.5% in June from a year earlier, compared with 2.6% the month before.
September silver futures gained 2.4% Tuesday to settle at $28.53 an ounce on Comex, and the front-month contract increased 1.8% in the first two days of the week. Silver is down 3.5% so far this month after falling 2.9% in June and surging 14% in May. It ticked up 0.2% in 2023. The September contract is currently up $0.350 (+1.23%) an ounce to $28.875 and the DG spot price is $28.83.
Spot palladium retreated 1% Tuesday to $905.50 an ounce and is down 0.6% so far this week. Palladium is down 8.7% in July after rallying 8.1% last month and declining 5.1% in May. Palladium plummeted 38% last year. Currently, the DG spot price up $36.30 an ounce to $943.00.
Spot platinum rose 1.2% Tuesday to $969.60 an ounce and gained 3% in the first two days of the week. Platinum is down 3.4% in July after falling 3.7% in June and advancing 10% in May. Platinum dropped 6.8% in 2023. The DG spot price is currently up $10.80 an ounce to $978.90.
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