Gold rises to eight-month high early Monday as the dollar slipped and as investors increasingly anticipated a slowdown in the Federal Reserve’s interest rate hikes.
Fed Chairman Jerome Powell is scheduled to speak Tuesday in Stockholm, and investors will be closely listening to his remarks for indications of future central bank moves to curb inflation through interest rate increases. The next U.S. inflation report – the consumer price index for December – is also due out Tuesday.
Front-month gold futures surged 2.4% last week to settle at $1,869.70 an ounce on Comex after the February contract advanced 1.6% Friday. Bullion gained 3.8% in December after increasing 7.3% in November. It was the first two-month rally since March. The metal fell $2.40 in 2022. The February contract is up $11.70 (+0.63%) an ounce to $1881.40 and the DG spot price is $1880.00.
The key U.S. jobs report for December, released Friday, showed that the labor market remains tight in the face of the Fed’s rate hikes. Nonfarm payrolls rose 223,000 last month, beating estimates for a 200,000 increase. But wage growth came in below expectations, a sign that the Fed’s actions are starting to affect the economy and may require policymakers to slow the pace of rate increases.
The Fed raised interest rates by 425 basis points in 2022 to 4.25% to 4.5%, the highest level in 15 years, and has signaled it’s not done yet. Investors closely parse the jobs report each month for signs that rising rates are beginning to affect it. High interest rates are typically bearish for gold.
The Fed boosted rates by 50 basis points in December after 75 basis point increases each in June, July, September, and November. Investors tracked by the CME FedWatch Tool are betting there’s a 76.2% chance the Fed will boost interest rates by just 25 basis points at policymakers’ next meeting on Feb. 1. The odds are 23.8% in favor of another 50 basis point hike.
Also potentially bullish for gold prices is the reopening of China’s borders following prolonged COVID-19 lockdowns. China is the world’s largest bullion consumer.
Front-month silver futures fell 0.2% last week to settle at $23.98 an ounce on Comex, though the March contract gained 2.4% Friday. Silver rose 10% in December after increasing 14% in November, its biggest monthly gain since December 2020. It advanced 3% in 2022. The March contract is up $0.163 (+0.68%) an ounce to $24.145 and the DG spot price is $24.06.
Spot palladium increased 1.3% last week to $1,828.00 an ounce after advancing 3.5% Friday. Palladium tumbled 4% in December after gaining 0.3% in November. It lost 5.7% in 2022. The current DG spot price is down $20.70 an ounce to $1811.00.
Spot platinum rose 2.8% last week to $1,099.40 an ounce after gaining 3% Friday. Platinum increased 3.4% last month after rising 11% in November, its best month since February 2021. It surged 10% in 2022. Currently, the DG spot price is down $.90 an ounce to $1098.70.
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