Gold softens early Monday, getting support from haven demand after the assassination attempt against former President Donald Trump but pressured by gains in other assets, including the dollar and Treasury yields.
Strength in the dollar and Treasury yields is typically bearish for gold, making the yellow metal less attractive as an alternate investment – particularly for holders of other currencies.
Last week, both the U.S. consumer price index and producer price index showed U.S. inflation pressures are subsiding, solidifying bets that the Federal Reserve will begin long-awaited interest rate cuts in September. Rate reductions are seen as bullish for gold, which becomes a more attractive alternate investment when rates go down.
August gold futures rose 1% last week to settle at $2,420.70 an ounce on Comex, though the most-active contract slipped $1.20 Friday. Bullion fell 0.3% last month after gaining 1.9% in May and 2.9% in April. The metal rose 13% in 2023. The August contract is currently down $1.10 (-0.05%) an ounce to $2419.60 and the DG spot price is $2416.80.
Investors will be closely watching the results of the investigation into the Trump assassination attempt and efforts by both political parties to tone down the rhetoric, even as the Republican National Convention is held this week in Milwaukee.
In economic news, while data released Friday showed the PPI increased slightly more than expected in June, so-called core CPI, which excludes volatile food and energy prices, rose 0.1% from May in data published earlier in the week. The core CPI figure was less than predicted by all but four analysts surveyed by Bloomberg and the smallest advance in three years.
The Fed closely watches both inflation and labor market data when determining monetary policy. The June U.S. jobs report last week showed that the labor market softened last month.
The CME FedWatch Tool shows 93.3% of the investors tracked are betting that the Fed will keep rates unchanged this month. But 92.6% expect the central bank to start cutting in September. The Fed kept interest rates unchanged again in June. The Fed has kept interest rates steady at 5.25% to 5.50% for about a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
In upcoming economic news, Fed Chairman Jerome Powell is scheduled to be interviewed Monday by David Rubenstein. Fed officials Mary Daly, Adriana Kugler, Thomas Barkin, Lorie Logan, Michelle Bowman, John Williams and Raphael Bostic are all scheduled to make remarks this week and may provide further insight on the central bank’s next moves.
Separately, U.S. retail sales and business inventories come out Tuesday. The Fed’s Beige Book economic report from its 12 regional banks comes out Wednesday. So do U.S. housing starts and industrial production data. And the European Central Bank is scheduled to announce a monetary policy decision Thursday.
September silver futures fell 1.7% last week to settle at $31.16 an ounce on Comex after the front-month contract decreased 1.6% Friday. Silver fell 2.9% last month after surging 14% in May and rising 7% in April. It ticked up 0.2% in 2023. The September contract is currently down $0.292 (-0.94%) an ounce to $30.870 and the DG spot price is $30.70.
Spot palladium dropped 5.8% last week to $981.50 an ounce and slid 2.5% Friday. Palladium rallied 8.1% last month after declining 5.1% in May and losing 5.9% in April. Palladium plummeted 38% last year. Currently, the DG spot price is down $17.80 an ounce to $963.00.
Spot platinum declined 3.2% last week to $1,006.10 an ounce and declined 0.4% Friday. Platinum fell 3.7% last month after advancing 10% in May and 3.1% in April. Platinum dropped 6.8% in 2023. The DG spot price is currently down $9.60 an ounce to $997.70.
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