Gold Slips On Dollar

Gold Slips On Dollar

Gold slips on strong dollar, extending losses early Monday – after its worst week in five weeks – as another Fed rate increase looms on the horizon.

Investors are closely watching economic reports and statements for clues on the pace of the Federal Reserve’s next interest rate hikes following increases of 375 basis points this calendar year. The minutes of Fed policy members’ last meeting early this month are due Wednesday and could provide further insight. 

Front-month gold futures slipped 40 cents last week to settle at $1,769.00 an ounce on Comex as the front-month contract flipped to February from December. The February contract dropped 0.5% Friday. Bullion fell 1.9% in October, its seventh straight month of declines. The metal is down 3.3% this year. Currently, the December contract is down 9.5 (-0.54%) an ounce to $1744.90 and the DG spot price is $1742.50.

U.S. economic releases – and trading volumes – are likely to be light this week because of the U.S. Thanksgiving Day holiday on Thursday, which will close financial markets. But the Organization for Economic Cooperation and Development is set to release its economic outlook Tuesday. 

The Fed’s Loretta Mester and James Bullard are also set to speak Tuesday. And investors will be closely watching how much consumers are willing to spend during the holiday shopping season, which starts the day after Thanksgiving, because of 40-year highs in inflation. 

The Fed is aiming to put a lid on consumer prices and get a handle on inflation through a series of interest rate hikes. There have been 75-basis-point increases each in June, July, September, and November, and the federal funds rate is now at 3.75% to 4%. High rates are typically bearish for gold because they make the yellow metal less attractive than other assets. 

Investors are betting there’s an 80.6% chance Fed policymakers will raise interest rates by 50 basis points in December, compared with 24.2% a month ago. About 19.4% of investors tracked by the CME FedWatch Tool are projecting a 75-basis-point hike, compared with 75.4% a month earlier. 

But haven assets like gold received some support from geopolitical uncertainty, including fears of renewed COVID-19 restrictions in China and the ongoing war in Ukraine. 

Front-month silver futures dropped 2.2% last week to settle at $21.20 an ounce on Comex as the front-month contract flipped to March from December. The March contract gained 0.2% Friday. Silver advanced 0.4% in October, its second consecutive monthly increase. It’s down 9.2% this year. The December contract is currently down $0.097 (-0.46%) on ounce to $20.900 and the DG spot price is $20.84.

Spot palladium retreated 3.8% last week to $1,973.50 an ounce and fell 2.9% Friday. Palladium declined 15% last month. It’s up 3.1% in 2022. Currently, the DG spot price is down $76.90 an ounce to $1885.00.

Spot platinum decreased 4.2% last week to $988.70 an ounce. It declined 0.3% Friday. Platinum gained 7.3% in October. It’s up 1.6% this year. The current DG spot price is slightly up, $0.60 an ounce, to $986.70.

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