Gold rose back above the $2500 mark Monday on rate cut expectations. Last week’s release of the key U.S. jobs report for August had cast doubt on how big the Federal Reserve’s long-expected interest rate cut next week will be.
U.S. nonfarm payrolls missed estimates for last month, though the unemployment rate slipped slightly. The broader market tumbled Friday. Investors will be awaiting Wednesday’s release of the latest U.S. inflation report for further direction.
Front-month gold futures slipped 0.1% last week to settle at $2,524.60 an ounce on Comex. The most-active December contract dropped 0.7% Friday. Bullion gained 2.2% in August after increasing 5.7% in July, its biggest monthly gain since March. Gold fell 0.3% in June. The metal rose 13% in 2023. The December contract is currently up $7.80 (+0.31%) an ounce to $2532.40 and the DG spot price is $2501.20.
Nonfarm payrolls rose 142,000 last month, below economists’ estimates of a 160,000 increase, according to data released Friday. Unemployment slipped to 4.2% from 4.3% in June. The U.S. jobs report is important because the Fed closely looks at both labor market and inflation data when crafting monetary policy.
Rate cuts are considered bullish for gold because they make it a more attractive investment than some other assets.
August inflation data measured by the U.S. consumer price index and producer price index are due out Wednesday and Thursday. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came in in line with expectations the prior week with July data.
Investors tracked by the CME FedWatch Tool unanimously expect the Fed to begin interest rate cuts at the central bank’s next policy meeting ending Sept. 18. About 73% expect a 25 basis point cut, while the rest anticipate a 50 basis point cut. The Fed has kept interest rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Front-month silver futures fell 3.3% last week to $28.18 an ounce on Comex, and the December contract declined 3.2% Friday. Silver gained 0.7% last month after dropping 2.1% in July and falling 2.9% in June. It ticked up 0.2% in 2023. The December contract is currently up $0.377 (+1.34%) an ounce to $28.560 and the DG spot price is $28.15.
Spot palladium decreased 5.7% last week to $923.50 an ounce. It fell 3.1% Friday. Palladium increased 3.2% last month after decreasing 4.3% in July and gaining 8.1% in June. Palladium plummeted 38% last year. The current DG spot price is up $24.50 an ounce to $941.00.
Spot platinum dropped 0.4% last week to $927.60 an ounce. It lost 0.6% Friday. Platinum slid 5.2% in August after losing 2.1% in July and falling 3.7% in June. Platinum dropped 6.8% in 2023. Currently, the DG spot price is up $26.20 an ounce to $949.20.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.