Gold Slips from three-week high on firmer dollar

Gold Slips from three-week high on firmer dollar

Gold slips from a three-week high early Monday on a firmer dollar and as traders took profits from the previous session.

The yellow metal surged 2.8% Friday after the U.S. unemployment rate ticked in October, raising investors’ hopes that the Federal Reserve will slow the pace of its interest rate increases because they appear to be affecting the labor market. Higher rates are typically bearish for gold, making it less attractive than other assets, such as the dollar, for investors. 

The unemployment rate rose to 3.7% last month from 3.5% in September, according to data released Friday by the Labor Department. But payrolls increased by 261,000 last month, better than the 205,000 estimates by economists before the report. 

Front-month gold futures rose 1.9% last week to settle at $1,676.60 an ounce on Comex after the December contract increased by $45.70 Friday. Bullion fell 1.9% in October, its seventh straight month of declines. The metal is down 8.3% this year. Currently, the December contract is up $5.00 (+0.30%) an ounce to $1681.60 and the DG spot price if $1681.20.

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

The Fed raised interest rates by 75 basis points last week, bringing its total increase for the year to 375 basis points. The federal funds rate is now at 3.75% to 4%, following increases of 75 basis points each in June, July, September and November. 

The next key economic indicator that may drive Fed policy is the latest inflation report, the October consumer price index, which comes out Thursday. The Fed’s favorite inflation measure, the personal consumption expenditures price index, increased in September. 

Investors will also be closely watching the results of the U.S. midterm elections on Tuesday. If Congress flips, as many people are expecting, it will likely affect a broad swath of public policy that could influence market direction. 

Front-month silver futures rose 8.6% last week to settle at $20.78 an ounce on Comex. The December contract rallied 7% Friday. Silver advanced 0.4% in October, its second consecutive monthly increase. It’s down 11% this year. The December contract is currently up $0.186 (+0.89%) an ounce to $20.970 and the DG spot price is $21.01.

Spot palladium dropped 2.6% last week to $1,872.50 an ounce, though it gained 1.8% Friday. Palladium declined 15% last month. It’s down 2.2% in 2022. The current DG spot price is up $35.50 an ounce to $1905.00.

Spot platinum increased 1.6% last week to $965.50 an ounce after rising 4.1% Friday. Platinum gained 7.3% in October. It’s down 0.8% this year. The DG spot price is currently up $19.70 an ounce to $980.60.

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