Gold Slips From Five-Month High

Gold Slips From Five-Month High

Gold slips from five-month high after hitting that mark early Monday. The bullion eased as the dollar clawed back some ground, but bulls are keeping gold is near $1800.

The yellow metal is bolstered by the easing of COVID-19 restrictions in China and speculation that the Federal Reserve’s next interest rate hike would be smaller than the last four. 

Front-month gold futures rose 2.3% last week to settle at $1,809.60 an ounce on Comex, though the February contract dropped 0.3% Friday. Bullion gained 7.3% in November, its first monthly rally since March. The metal is down 1% this year. The February contract is down $7.60 (-0.42%) an ounce to $1802.00 and the DG spot price is $1790.70.

Moves toward reopening in China weighed on the U.S. dollar, which is bullish for gold. And the easing of restrictions is also expected to bolster demand for gold since China is the world’s largest consumer of the precious metal. Separately, speculation is mounting that the Fed will raise interest rates by a smaller amount when it makes its next policy decision on Dec. 14. High-interest rates reduce the opportunity cost of holding gold.

The Fed has raised rates by 375 basis points this calendar year to tame 40-year highs in inflation. The rate hikes were 75 basis points each in June, July, September, and November. 

Investors are betting there’s a 74.7% chance the Fed will raise interest rates by 50 basis points in December, compared with 61.5% a month ago. About 25.3% of investors tracked by the CME FedWatch Tool are projecting another 75-basis-point hike, compared with 38.5% a month ago. 

But U.S. jobs growth was much better than economists forecast in November, according to a Labor Department report released Friday. Fears that big interest rates will derail the labor market are among the reasons economists have speculated that the Fed could slow the rate of its interest rate increases. But nonfarm payrolls increased by 263,000 last month, compared with a 200,000 estimate by economists surveyed by Dow Jones.  

The Fed’s favorite inflation measure, the personal consumption expenditures price index, posted its second-smallest increase this year in October, according to data from the U.S. Bureau of Economic Analysis released last week. The March contract is currently down $0.360 (-1.55%) an ounce to $22.890 and the DG spot price is $22.71.

Front-month silver futures rose 7.6% last week to settle at $23.25 an ounce on Comex after the March contract gained 1.8% Friday. Silver increased 14% in November, its biggest monthly gain since December 2020. It’s down 0.4% this year.  

Spot palladium advanced 3.3% last week to $1,924.50 an ounce, though it dropped 1.8% Friday. Palladium rose 0.3% last month after declining 15% in October. It’s up 0.5% in 2022. Currently, the DG spot price is down $8.10 an ounce to $1913.00.

Spot platinum increased 4% last week to $1,025.50 an ounce, though it decreased 2.2% Friday. Platinum gained 11% in November, its best month since February 2021. It’s up 5.4% this year. The DG spot price is currently down $9.50 an ounce to $1017.10.

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