Gold steady, sticking near the $2400 an ounce mark early Wednesday, after a volatile start to the week. The first few days saw the broader, global market reacting to worse-than-expected U.S. July job data and mounting speculation that the economy was on the brink of a recession.
Gold has slipped this week as Treasurys and the dollar strengthened as a hedge against the uncertainty. But the yellow metal’s status as another haven asset kept prices elevated, particularly because of geopolitical unrest and increasing tensions in the Middle East.
Front-month gold futures fell 0.5% Tuesday to settle at $2,431.60 an ounce on Comex, and the most-active December contract fell 1.6% in the first two days of the week. Bullion increased 5.7% in July, its biggest monthly gain since March. Gold fell 0.3% in June and gained 1.9% in May. The metal rose 13% in 2023. The December contract is currently up $8.20 (+0.34%) an ounce to $2439.80 and the DG spot price is $2400.15.
Wall Street had its worst drop in almost two years Monday amid investor fears over slowing growth and what the Fed would do.
San Francisco Fed President Mary Daly said Monday that she expects a rate cut this year, but how much and when will “depend a lot on the coming information.” She spoke at a forum in Hawaii. “From my mind, we’ve now confirmed that the labor market is slowing and it’s extremely important that we not let it slow so much that it turns itself into a downturn.”
The Fed closely watches both inflation and labor market data when determining monetary policy. Fed Chairman Jerome Powell signaled after the central bank’s latest policy meeting a week ago that officials are likely to begin rate reductions in September, unless progress combatting inflation stalls. A rate cut would be considered bullish for gold, which becomes a more attractive alternate investment when rates go down.
The key U.S. monthly jobs report for July on Friday came in just short of expectations, possibly indicating that the high interest rates are starting to affect the labor market and strengthening the case for a rate cut sooner rather than later.
The CME FedWatch Tool shows all of the investors tracked are betting that the Fed will cut rates in September. But in a flip from last week, most – 63.5% – are now projecting a 50 basis point cut rather than a 25 basis point cut. A week ago, 86.3% were projecting a 25 basis point reduction. The Fed has kept interest rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Separately, much of the Middle East was braced for an escalation, including a possible retaliation on Israel from Iran after the killing of Ismail Haniyeh, a senior Hamas leader, while he was in Iran.
September silver futures rose 1 cent Tuesday to settle at $27.22 an ounce on Comex, though the front-month contract decreased 4.1% in the first two days of the week. Silver dropped 2.1% in July after falling 2.9% in June and surging 14% in May. It ticked up 0.2% in 2023. The September contract is currently down $0.186 (-0.68%) an ounce to $27.030 and the DG spot price is $29.96.
Spot palladium rallied 3.7% Tuesday to $891.00 an ounce and fell 1% in the first two days of the week. Palladium decreased 4.3% in July after rallying 8.1% in June and declining 5.1% in May. Palladium plummeted 38% last year. The current DG spot price is up $22.10 an ounce to $911.50.
Spot platinum rose 0.7% Tuesday to $920.30 an ounce, though it fell 4.6% so far this week. Platinum lost 2.1% in July after falling 3.7% in June and advancing 10% in May. Platinum dropped 6.8% in 2023. The DG spot price is currently up $8.00 an ounce to $927.20.
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.