Gold solidifies on this morning’s inflation data and is poised for a third straight quarterly rise.
The core personal consumption expenditures price index just rose a seasonally adjusted 0.1% for the month and was up 2.6% from a year ago, both numbers were in line with the Dow Jones estimates. A key point is that May numbers marked the lowest annual rate since March 2021.
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. Interest rates affect gold prices because they influence the attractiveness of the yellow metal in respect to other assets.
August gold futures rose 1% Thursday to settle at $2,336.60 an ounce on Comex, and the most-active contract gained 0.2% in the first four days of the week. Bullion is down 0.4% this month after gaining 1.9% in May and 2.9% in April. The metal rose 13% in 2023. The August contract is currently up $5.30 (+0.23%) an ounce to $2341.90 and the DG spot price is $2333.40.
The PCE is forecast to show 2.6% annual growth overall and in the core index, which excludes volatile food and energy prices, according to economists’ projections gathered by Bloomberg. Month-on-month, the core May index is likely to gain 0.1%. The Fed has a 2% inflation target.
First quarter U.S. GDP data came out Thursday and showed that the U.S. economy posted the slowest quarterly growth since spring 2022, though the figure was higher than a previous estimate. Consumer spending grew just 1.5%, down from an initial estimate of 2%; that may signal that high interest rates are affecting the economy. Separately, weekly U.S. initial jobless claims data showed that new applications for unemployment benefits drifted lower last week.
The CME FedWatch Tool shows 89.7% of the investors tracked are betting that the Fed will keep rates unchanged in July. But 65.9% expect the central bank to start cutting in September.
Separately, investors were closely watching the response to the Thursday evening debate between President Joe Biden and former President Donald Trump for indications on what the next presidential term will look like.
September silver futures were unchanged Thursday to settle at $29.19 an ounce on Comex, and the front-month contract was down 2.3% in the first four days of the week. Silver is down 3.9% this month after surging 14% in May and rising 7% in April. It ticked up 0.2% in 2023. The Fed kept interest rates unchanged again earlier this month. The September contract is currently up $0.394 (+1.35%) an ounce to $29.650 and the DG spot price is $29.46.
Spot palladium rose 0.7% Thursday to $946.50 an ounce and is down 3.2% so far this week. Palladium is up 3.2% this month after declining 5.1% in May and losing 5.9% in April. Palladium plummeted 38% last year. Currently, the DG spot price is up $44.00 an ounce to $984.50.
Spot platinum decreased 3% Thursday to $995.60 an ounce and has retreated 0.5% so far this week. Platinum is down 4.5% this month after advancing 10% in May and 3.1% in April. Platinum dropped 6.8% in 2023. The DG spot price is currently up $14.80 an ounce to $1011.00.
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.