Gold slips on stronger dollar early Friday ahead of next week’s Fed meeting. The yellow metal slipped below $1650 an ounce after the release of this morning’s key inflation report.
Core personal consumption expenditures price index rose slightly in September, but mostly within expectations, per the Bureau of Economic Analysis. The PCE index was up 0.5% from the previous month and accelerated 5.1% over the past 12 months. While the monthly gain was in line with estimates, the annual increase was slightly below the 5.2% forecast. The report comes as the Fed is prepared to enact its sixth interest rate increase of 2022.
Investors now turn to next Wednesday’s Fed meeting and speculation on whether the Fed will announce another 75 basis point hike Nov. 2. Traders are trying to determine whether inflation peaked in September – or neared a peak – and whether prices will keep rising, dampening economic growth.
But U.S. GDP beat expectations in the third quarter. It expanded at a 2.6% pace, according to the Bureau of Economic Analysis on Thursday, topping economists’ consensus estimate of 2.3%
Front-month gold futures fell 0.2% Thursday to settle at $1,665.60 an ounce on Comex. The December contract advanced 0.6% in the first four days of the week. Bullion fell 3.1% in September and 7.5% in the third quarter. The metal is down 8.9% this year. Currently, the December contract is down $18.10 (-1.09%) an ounce to $1647.50 and the DG spot price is $16.00.
Investors are now betting there’s an 82.8% chance of a 75-basis-point rate increase at the next meeting of Fed policymakers in early November, with the remaining 17.2% projecting a 50-basis-point hike, according to the CME FedWatch Tool. Just a day ago, 92.5% of investors anticipated a 75-basis-point increase, with 7.5% predicting a 50-basis-point hike.
The Fed has raised rates by 300 basis points so far this year to 3% to 3.25%, following increases of 75 basis points each in June, July, and September. The central bank is widely expected to announce another 75 basis point hike next week to rein in the highest inflation in more than 40 years. Higher interest rates are typically bearish for gold, though the underlying inflation is bullish.
The European Central Bank raised rates by 75 basis points Thursday, its third consecutive one this year. But the Bank of Japan bucked the global trend Friday by leaving the country’s negative rate unchanged.
Front-month silver futures gained 0.8 cents Thursday to settle at $19.49 an ounce on Comex. The December contract gained 2.2% in the first four days of the week. Silver advanced 6.5% in September and fell 6.5% in the third quarter. It’s down 17% this year. The December contract is currently down $0.239 (-1.23%) an ounce $19.255 and the DG spot price is $19.36.
Spot palladium tumbled 0.5% Thursday to $1,967.00 an ounce and has retreated 3.5% so far this week. Palladium rose 5.9% last month and 13% in the third quarter. It’s up 2.7% in 2022. Currently, the DG spot price is down $28.20 an ounce to $1940.00
Spot platinum gained 1% Thursday to $972.90 an ounce and rose 3.1% in the first four days of the week. Platinum rose 2.6% in September. It fell 4% in the third quarter and is down 20 cents this year. The current DG spot price has dropped $14.90 an ounce to $954.50.
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