Gold steadies as dollar weakens

Gold steadies as dollar weakens

Gold steadies early Monday as dollar weakens on anticipation that the Federal Reserve will soon end its series of interest rate hikes kept a floor under Gold prices after reports last week that inflation was slowing.

August gold futures rose 1.7% last week to settle at $1,964.40 an ounce on Comex after the front-month contract gained 60 cents Friday. Bullion dropped 2.7% last month after retreating 0.9% in May and increasing 0.6% in April. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. The August contract is currently down $6.90 (-0.35%) an ounce to $1957.50 and the DG spot price is $1953.40.

Last week, the U.S. consumer price index data for June indicated that the economy shifted into disinflation. U.S. wholesale prices also rose less than expected in June, according to a separate report from the Labor Department.

Most investors still expect another rate hike next week, but there‚Äôs increasing speculation that the rate increases to stem inflation may be winding to a close. 

About 96.1% of investors tracked by the CME FedWatch Tool are still betting that the Fed will raise rates by 25 basis points at its July monetary policy meeting, while 3.9% expect it to keep rates unchanged. 

The Fed has increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022. The Fed held rates unchanged last month for the first time after 10 consecutive increases. The Fed left its benchmark federal funds rate at 5.00% to 5.25% in June.

Key economic data due this week include the Empire State manufacturing index on Monday, U.S. retail sales and industrial production on Tuesday, housing starts on Wednesday and weekly initial jobless claims and U.S. leading economic indicators on Thursday. 

September silver futures surged 8.2% last week to $25.19 an ounce on Comex after the most-active contract rallied 1% Friday. Silver dropped 2.4% in June after decreasing 6.5% in May and gaining 4.4% in April. It retreated 4.2% in the first half of the year after rising 3% in 2022. The September contract is currently down $0.199 (-0.79%) an ounce to $24.995 and the DG spot price is $24.83.