Gold rises early Monday to two-week high on haven demand after U.S. consumer sentiment fell to almost the lowest level on record, signaling a weakening economy. The yellow metal also boosting on signs that the government may be opening, giving rise to hopes of economic data finally being released that supports a December rate cut.
The consumer data, which came amid a relative dearth of economic data because of the U.S. government shutdown, added to uncertainty over higher prices. While a key group of U.S. Senate Democrats joined Republicans late Sunday to advance an agreement to end the government shutdown, something that would remove uncertainty and therefore typically be bearish for gold, it wasn’t enough to overcome the negative economic vibe.
Seven Democratic senators and one independent voted with almost all of the Senate’s Republicans to take the first step toward reopening the government, which has been shut since Oct. 1.
December gold futures rose 0.3% last week to settle at $4,009.80 an ounce on Comex after the front-month contract gained 0.5% Friday. Bullion increased 3.2% last month after surging 10% in September, the most in six months, and adding 5% in August. It’s up 52% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract has currently jumped up $78.10 (+1.95%) an ounce to $4087.90 and the DG spot price is $4090.20.
University of Michigan consumer sentiment data released Friday showed that high prices and the government shutdown are hurting views about personal finances. The preliminary November index dropped 3.3 points to 50.3. That’s the lowest level since June 2022. And the figure of 50 at that time was the worst in data dating back to 1978.
The University of Michigan report came out a day after one issued by outplacement firm Challenger, Gray & Christmas showed that the U.S. lost the largest number of jobs in more than 20 years in October.
The weakness in the labor market is increasing investor speculation that the Federal Reserve may go ahead and cut interest rates in December, something that Chair Jerome Powell said last month wasn’t a sure thing. Lower interest rates are traditionally bullish for the gold market, making the yellow metal a more attractive alternate investment.
The Fed closely follows jobs and inflation data when setting monetary policy. The central bank is still widely expected to cut interest rates for a third consecutive time in December. Last week, the Fed reduced interest rates to 3.75% to 4.00%.
Over 67% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by another 25 basis points in December. The rest anticipate that the Fed will leave rates unchanged. The cut last month was the second 25-basis point reduction in a row. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver futures fell 2 cents last week to settle at $48.14 an ounce on Comex, though the December contract rallied 0.4% Friday. Silver gained 3.3% in October after rising 15% in September, the biggest monthly rally in two and a half years, and climbing 11% in August. It rose 21% in 2024. The December contract is currently up a whopping $1.587 (+3.30%) an ounce to $49.730 and the DG spot price is $50.00.
Spot palladium lost 2.4% last week to $1,410.00 an ounce but increased 1.4% Friday. Palladium rose 14% last month after rising 14% in September and declining 7.8% in August. Palladium dropped 17% last year. Currently, the DG spot price is up $18.80 an ounce to $1412.00.
Spot platinum decreased 2.2% last week to $1,547.60 an ounce but gained 0.4% Friday. It advanced 1% in October after gaining 15% in September and rising 5.9% in August. Platinum lost 8.4% in 2024. The DG spot price is currently up $29.40 an ounce to $1571.50.
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