Gold slips lower on profit-taking and a strengthening dollar during light holiday trading, with no major economic news due out before the New Year. Gold had hit a six-month high on Tuesday.
An uptick in the dollar put a damper on gold prices, making the yellow metal less attractive as an alternate investment. But gold prices continued to take direction from the economy, including high inflation and anticipation of future Federal Reserve actions.
Front-month gold futures rose 1.1% Tuesday to settle at $1,823.10 an ounce on Comex after the February contract advanced $4 last week. U.S. financial markets were closed Monday in observance of the Christmas holiday, which fell on a Sunday this year. Bullion is up 3.6% this month after increasing 7.3% in November, its first monthly rally since March. The metal is down 0.3% in 2022. The February contract is currently down $10.4 (-0.57%) an ounce to $1812.70 and the DG spot price is $1807.40.
Economic data released at the end of last week showed that the Fed’s favorite inflation measure, the personal consumption expenditures price index, excluding food and energy prices, eased in November. It rose 0.2% last month from a month earlier, in line with economists’ expectations, in an indication that a series of Fed interest rate increases to rein in runaway inflation are starting to have an impact.
The Fed has boosted interest rates by 425 basis points this calendar year, most recently raising rates by 50 basis points this month to 4.25% to 4.5%, the highest level in 15 years. Fed Chairman Jerome Powell said after that policy decision that the central bank would maintain its aggressive monetary policy in 2023 despite some investors’ fears of a recession. High interest rates are typically bearish for the yellow metal.
Minutes of the last Fed meeting are due next week – on Jan. 4 – and are likely to provide further insight into the central bank’s future actions.
Investors tracked by the CME FedWatch Tool are betting there’s a 64.2% chance the Fed will boost interest rates by just 25 basis points at the policymakers’ next meeting on Feb. 1. The odds are 35.8% in favor of another 50 basis point hike. The December rate increase was the smallest in some time after the Fed raised rates by 75 basis points each in June, July, September, and November.
Economic releases are light before the New Year, though weekly initial jobless claims are due out Thursday. Next week, however, brings key manufacturing reports from all major economies and the closely watched monthly U.S. jobs report for December on Friday.
Front-month silver futures rallied 1.2% Tuesday to settle at $24.22 an ounce on Comex after the March contract gained 2.5% last week. Silver is up 11% so far this month after increasing 14% in November, its biggest monthly gain since December 2020. It’s up 3.7% this year. The March contract is currently down $0.232 (-0.96%) an ounce to $23.985 and the DG spot price is $23.88.
Spot palladium increased 5.2% Tuesday to $1,859.00 an ounce after rising 1.7% last week. Palladium is down 1.1% in December after gaining 0.3% last month. It’s down 2.9% in 2022. The current DG spot price is down $25.80 an ounce to $1825.50.
Spot platinum edged up 40 cents Tuesday to $1,029.40 an ounce after rallying 2.9% last week. Platinum is down 0.5% this month after rising 11% in November, its best month since February 2021. It’s up 5.8% this year. Currently, the DG spot price is up $2.80 an ounce to $1031.50.
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