Gold rises steadily overnight on haven demand after the attack on U.S. troops in Jordan. The yellow metal’s rebound sparked by the spread of Middle East strive follows a second consecutive weekly drop.
Investors are looking to Wednesday’s Federal Reserve policy statement for signals on when the central bank plans to start cutting interest rates. The Fed is widely expected to leave its federal funds rate unchanged at 5.25% to 5.50% this week, but the comments following the meeting will be closely parsed. High interest rates are typically bearish for gold, but imminent rate cuts would be bullish.
Front-month gold futures fell 0.6% last week to settle at $2,036.10 an ounce on Comex after the most-active April contract slipped 70 cents Friday. Bullion is down 1.7% in January after gaining 0.7% in December and rising 3.2% in November. The metal rose 13% in 2023. The April contract is currently up $15.60 (+0.77%) an ounce to $2051.70 and the DG spot price is $2028.40.
Three U.S. servicemembers were killed Sunday in Jordan after an unmanned aerial drone attack, the latest sign that the conflict that began between Israel and Hamas in Gaza is spreading.
In a further bit of uncertainty attracting haven demand, a Hong Kong court on Monday ordered the liquidation of Evergrande, the world’s most indebted property developer and once a symbol of Chinese prosperity.
About 97.9% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates steady at this week’s meeting, while just 2.1% expect a 25 basis point cut. Most investors tracked by the tool aren’t expecting an interest rate cut until May, though the central bank was widely expected to begin reducing rates in March just weeks ago, before a series of strong economic reports. The Fed has raised interest rates by 5.25 percentage points since March 2022 to curb inflation.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, came out Friday and showed that so-called core PCE, which excludes volatile food and energy prices, fell below 3% in December for the first time since March 2021, before the Fed started raising rates.
Core PCE grew 2.9% last month, down from 3.2% in November. The figure was also better than the 3% forecast by economists. Fed Chair Jerome Powell most frequently cites core PCE as an inflation measure. On a monthly basis, core PCE rose 0.2% in December, up from 0.1% in November. Annualized core PCE over the last three and six months is now below the Fed’s stated 2% target for inflation.
Front-month silver futures rose 0.7% last week to $22.87 an ounce on Comex, though the March contract slipped 0.2% Friday. Silver is down 5% so far in January after dropping 6.1% in December and advancing 12% in November. It ticked up 0.2% in 2023. The March contract is currently up $0.228 (+1.00%) an ounce to $23.100 and the DG spot price is $22.88.
Spot palladium gained 2.2% last week to $975.00 an ounce after rallying 2.3% Friday. Palladium has tumbled 13% so far this month after advancing 8.6% in December and losing 9.5% in November. Palladium plummeted 38% last year. Currently, the DG spot price is up $12.60 an ounce to $984.00.
Spot platinum rose 2% last week to $924.50 an ounce after advancing 3.2% Friday. Platinum is down 7.3% this month after rising 8.1% in December and falling 0.7% in November. Platinum dropped 6.8% in 2023. The DG spot price is currently up $8.70 an ounce to $931.00.
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