Gold slips ahead of Fed minutes, dipping on a stronger dollar, while shrugging off flat U.S. retail sales as investors awaited signals on the Federal Reserve’s likely future moves to combat inflation for further direction.
The minutes of last month’s meeting of Fed policymakers will come out Wednesday at 2 pm EDT, bringing indications about members’ thinking on future rate increases. Fed Governor Michelle Bowman is also scheduled to speak Wednesday.
July’s retail sales were basically flat, held down by falling fuel prices per the Census Bureau reported Wednesday. There had been a forecasted increase of 0.1%. Retail and food sales excluding gasoline and autos rose 0.7% from a month ago.
Front-month gold futures fell 0.5% Tuesday to settle at $1,789.70 an ounce on Comex. The December contract decreased 1.4% in the first two days of the week. Bullion dropped 1.4% in July after falling 2.2% in June and 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. Currently, the December contract is down $6.80 (-0.38%) an ounce to $1782.90 and the DG spot price is $1769.30.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fun, fell 0.18% Tuesday to 992.20 metric tons, Reuters reported.
The dollar was also little changed early Wednesday after rising to a three-week peak Tuesday which pressured gold prices, which typically fall when interest rates and the U.S. currency rise.
A few recent positive economic reports have made it less likely that the Fed will be as aggressive with interest rate increases in September as it was in June and July, when it raised rates by 75 basis points each.
U.S. industrial production for July beat analysts’ expectations, according to a Fed report published Tuesday. Output rose 0.6%, more than the 0.3% increase forecast by economists.
Last week, the consumer price index report for July was after a 1.3% increase in June, and the inflation rate in the 12 months to July slipped to 8.5% from a 41-year high of 9.1% in June, possibly indicating that inflation peaked at a four-decade high.
Investors are now betting there’s a 57.5% chance of a 50-basis-point rate hike in September, with just 42.5% projecting a 75-basis-point increase, according the CME FedWatch Tool. A month ago, 63.2% of investors anticipated a hike of 75-basis points or more.
In other economic news, the retail sales report comes out Wednesday and initial jobless claims and the index of leading economic indicators Thursday. Kansas City Fed President Esther George will speak Thursday and Richmond Fed President Tom Barkin on Friday.
Investors will also be keeping an eye on developments regarding the war in Ukraine, the pandemic, and relations between the U.S. and China.
Front-month silver futures fell 1% Tuesday to settle at $20.20 an ounce on Comex. The December contract tumbled 3.1% in the first two days of the week. Silver slipped 0.8% in July after declining 6.2% in June and falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is currently down $0.310 (-1.54%) an ounce to $19.775 and the DG spot price is $19.90.
Spot palladium gained 0.2% Tuesday to $2,173.50 an ounce, though it’s down 3.3% so far this week. Palladium rose 9.9% in July after losing 2.9% in June and 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. The current DG spot price is down $3.30 an ounce to $2171.00
Spot platinum advanced 60 cents Tuesday to $943.40 an ounce, though it fell 2.7% in the first two days of the week. Platinum retreated 0.3% in July after losing 7.2% in June. It dropped 9.4% last year. The DG spot price is down $4.30 an ounce to $937.40, currently.
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