Gold slips on profit-taking early Monday following the yellow metal’s recent record highs, while haven demand following an escalation in the Middle East conflicts over the weekend supported it.
Gold has reached new records in the past week and a half since the Federal Reserve cut interest rates for the first time since the pandemic. It’s expected to continue further loosening monetary policy, particularly after the Fed’s favorite inflation indicator, the personal consumption expenditures price index, came in lower than expected on Friday. Looser monetary policy is typically bullish for precious metals, increasing their appeal as alternate investments.
Separately, an Israeli airstrike hit central Beirut early Monday, hours after reaching targets across Lebanon and killing dozens of people and days after the killing of Hezbollah’s leader, Hassan Nasrallah. Israel has repeatedly targeted Beirut’s southern suburbs over the past week. Israel also said Sunday that dozens of its aircraft struck Houthi targets in Yemen.
Front-month gold futures rose 0.8% last week to settle at $2,668.10 an ounce on Comex, though the most-active December contract lost 1% Friday. Bullion is up 5.6% this month after advancing 2.2% in August and increasing 5.7% in July, its biggest monthly gain since March. The metal rose 13% in 2023. The December contract is currently down $10.90 (-0.41%) an ounce to $2657.20 and the DG spot price is $2638.80.
Fed Chairman Jerome Powell and Governor Michelle Bowman are both scheduled to speak Monday and may provide further signals on monetary policy.
The Fed rate cut earlier this month lowered interest by 50 basis points to 4.75% to 5.00%. The central bank had kept them at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Headline PCE rose 0.1% last month, in line with economists’ expectations, data released Friday showed. The 12-month figure slowed to 2.2%, the lowest level since February 2021, down from 2.5% in July. It was expected to come in at 2.3%. Excluding food and energy costs, core PCE rose 0.1% last month and 2.7% on a year-on year basis. The 12-month figure was 0.1% higher than in July.
All investors tracked by the CME FedWatch Tool agree that the Fed will likely cut rates again in November, with over 60% expecting a 25 basis point cut and the rest anticipating a 50 basis point reduction. The Fed has two scheduled policy meetings left this year, and most investors tracked by the tool expect rates to drop to 4.00% to 4.25% or lower by the end of 2024.
Tuesday will bring first-of-the-month manufacturing data from economies around the world as well as additional Fed speeches. Key U.S. employment data are also due out in the back half of the week.
Front-month silver futures increased 1% last week to $31.82 an ounce on Comex, though the December contract fell 1.6% Friday. Silver is up 9.2% this month after gaining 0.7% in August and dropping 2.1% in July. It ticked up 0.2% in 2023. The December contract is currently down $0.461 (-1.45%) an ounce to $31.355 and the DG spot price is $31.07.
Spot palladium dropped 5.7% last week to $1,026.50 an ounce after falling 3.1% Friday. Palladium is up 4.9% in September after increasing 3.2% in August and decreasing 4.3% in July. Palladium plummeted 38% last year. Currently, the DG spot price is down $24.90 to $1011.50.
Spot platinum rallied 2.8% last week to $1,011.60 an ounce, though it decreased 0.4% Friday. Platinum is up 8.6% this month after sliding 5.2% in August and losing 2.1% in July. Platinum dropped 6.8% in 2023. The DG spot price is currently down $33.70 an ounce to $982.30.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.