Gold set for fifth weekly gain despite a slight retreat early Friday from Wednesday’s record highs as the dollar strengthened. Traders await further cues on the direction of U.S. policy outlook two days after the Federal Reserve announced its first interest rate cut in nine months.
Fed Chairman Jerome Powell said that the worsening labor market prompted the 25 basis point cut in the federal funds rate to 4.00% to 4.25% on Wednesday, even though inflation is getting worse. While most investors read Fed policymakers’ statement as signaling that another two rate cuts are likely before the end of the year, some pointed to Powell’s remarks that officials were in a “meeting-by-meeting situation” regarding further monetary policy easing.
Typically, lower interest rates are bullish for gold, making it a more attractive alternate investment, but Powell’s cautionary statement has limited that.
December gold futures fell 1.1% Thursday to settle at $3,678.30 an ounce on Comex, and the front-month contract slipped 0.2% in the first four days of the week. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 39% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $13.00 (+0.35%) an ounce to $3691.30 and the DG spot price is $3656.50.
The strength in the dollar also tempered gold’s advance and helped push it down from record highs. Gold becomes more expensive for holders of other currencies with the dollar goes up.
The Fed has said it closely watches jobs and inflation data when setting monetary policy. U.S. weekly initial jobless claims fell by the most in almost four years last week, according to data released Thursday. The report reversed a surprise increase to the highest level since October 2021 posted a week earlier. New applications for jobless benefits declined by 33,000 in the week ended Sept. 13 to 231,000, the Labor Department report showed Thursday.
Almost 92% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with the rest expecting the central bank to hold rates unchanged.
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 slipped 3 cents Thursday to settle at $42.12 an ounce on Comex. The metal decreased 1.7% in the first four days of the week. Silver rallied 11% last month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently up $0.262 (+0.62%) an ounce to $42.380 and the DG spot price is $42.10.
Spot palladium rose 1.3% Thursday to $1,172.00 an ounce after decreasing 3.3% in the first four days of the week. Palladium declined 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. Currently, the DG spot price is down $24.60 an ounce to $1148.00.
Spot platinum gained 1.4% Thursday to $1,398.00 an ounce and is down 0.7% so far this week. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The DG spot price is currently up $0.10 an ounce to $1396.30.
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.