Gold slips after last week’s rally

Gold slips after last week’s rally

Gold slips early Monday ahead of inflation data, as investors took profits after last week’s rally and as the U.S. was poised to announce major new tariffs on Chinese electronic vehicles, semiconductors and green energy components.

U.S. consumer sentiment tumbled in April, according to data released Friday, amid concerns of high inflation which may affect the timeline of expected Federal Reserve interest rate cuts. Investors will be watching for the latest inflation data, found in the U.S. consumer price index and producer price index for April, for further direction this week.  

The Fed’s favorite inflation measure – the personal consumption expenditures price indexsurpassed economists’ estimates for both the headline and core numbers for March. The Fed’s goal is for 2% inflation. April U.S. consumer price index and producer price index data are due out next week.

The Biden administration plans to quadruple tariffs on EVs this week and raise them sharply on semiconductors and other items that use metals as a component, Bloomberg reported. That could dampen demand for some metals. 

Front-month gold futures gained 2.9% last week to settle at $2,375.00 an ounce on Comex after the most-active June contract rose 1.5% Friday. Bullion gained 2.9% in April after rising 8.9% in March – the biggest monthly gain in more than three years – and dropping 0.6% in February. The metal rose 13% in 2023. The June contract is currently down $20.40 (-0.86%) an ounce to $2354.60 and the DG spot price is $2348.90.

About 91.1% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates unchanged in June, while 8.9% expect a 25 basis point cut. More than 70% of investors also expect the Fed to hold rates at current levels in July. Most investors don’t expect a rate cut until September. The Fed has raised rates by 5.25 percentage points since March 2022 in an effort to rein in inflation. Persistently high inflation caused the Fed to keep interest rates unchanged at 5.25% to 5.50% at policymakers’ last meeting, with forecasts for a rate cut moving to later in the year. 

Haven demand from Israel’s escalating operation in Gaza continued to fuel haven demand, keeping prices elevated. Russian President Vladimir Putin replaced his long-serving defense minister over the weekend and is poised to visit China. Both moves are being closely watched for their impact on geopolitical tensions. NATO military leaders are also due to meet this week.

July silver futures increased 6.8% last week to settle at $28.51 an ounce on Comex after the front-month contract rallied 0.5% Friday. Silver rose 7% in April after gaining 8.9% in March and losing 1.2% in February. It ticked up 0.2% in 2023. The July contract is currently up $0.049 (+0.17%) an ounce to $28.555 and the DG spot price is $28.31

Spot palladium advanced 3.5% last week to $988.00 an ounce after it gained 0.9% Friday. Palladium declined 5.9% last month after advancing 7.7% in March and falling 4.6% in February. Palladium plummeted 38% last year. The DG spot price is currently down $2.20 an ounce to $988.00.

Spot platinum gained 4.2% last week to $1,002.50 an ounce after rising 1.4% Friday. Platinum gained 3.1% in April after rising 3.3% in March and decreasing 4.9% in February. Platinum dropped 6.8% in 2023. Currently, the DG spot price is up $8.70 an ounce to $1011.90.

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