Gold steady after weekly gain

Gold steady after weekly gain

Gold steady after its first weekly gain in five weeks amid uncertainty about the economy and the Federal Reserve’s next moves.

Fed Chairman Jerome Powell is scheduled to testify before a Senate committee Tuesday and a House committee Wednesday in his biannual Humphrey Hawkins report on monetary policy. Investors will be closely monitoring for indications of the central bank’s next move to curb inflation. Key U.S. jobs reports due out Wednesday, Thursday, and Friday will also be closely watched because the state of the labor market is one of the things the Fed assesses when making rate decisions. 

Front-month gold futures gained 2.1% last week to settle at $1,854.60 an ounce on Comex. The April contract advanced 0.8% Friday. Bullion dropped 5.6% last month, its worst performance since June 2021. It increased 6.5% in January and gained 3.8% in December. The metal fell $2.40 in 2022. The April contract is currently up $4.2 (+0.23%) an ounce to $1858.80 and the DG spot price is $1853.40.

The Fed has indicated it’s likely to raise interest rates well above 5% from their current 4.50% to 4.75% level, but investors are trying to determine how high policymakers will go and the rate and size of the incremental increases. Interest rate increases are considered bearish for gold because they make the metal less attractive as an alternate investment. 

San Francisco Fed President Mary Daly said in remarks Saturday that interest rates would likely have to go higher and stay there for a longer period of time.

The Fed raised rates by 25 basis points Feb. 1 following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. Most investors tracked by the CME FedWatch Tool are betting that the Fed will boost rates by another 25 basis points at policymakers’ next meeting March 22. The tool shows 69.4% of investors expecting a 25-basis-point hike, with the remaining 30.6% betting on the Fed to raise rates by 50 basis points. A month ago, 97.4% of those tracked were expecting a 25 basis point increase. 

A series of jobs reports due out later this week may influence the Fed’s next steps. The ADP employment report for February comes out Wednesday, followed by U.S. weekly initial jobless claims for last week on Thursday and the key U.S. monthly jobs report for February on Friday.

Applications for new U.S. unemployment benefits dropped for the third consecutive week last week, indicating that the labor market remains tight. Claims have been under 200,000 for the past seven weekly reports. 

The Fed’s favorite inflation measure, the U.S. personal consumption expenditures price index, unexpectedly accelerated in January. 

Silver May futures increased 1.4% last week to settle at $21.24 an ounce on Comex after the front-month contract gained 1.6% Friday. Silver retreated 12% last month after falling 0.9% in January and rising 10% in December. It advanced 3% in 2022. The May contract is currently up $0.007 (+0.03%) an ounce to $21.245 and the DG spot price is $21.19.

Spot palladium rallied 3.2% last week to $1,473.00 an ounce after rising 0.7% Friday. Palladium plummeted 14% in February after dropping 7.5% in January and retreating 4% in December. It lost 5.7% in 2022. The DG spot price is currently down $35.00 an ounce to $1439.00.

Spot platinum surged 7.2% last week to $983.00 an ounce after gaining 1.6% Friday. Platinum retreated 5.9% in February after falling 4.3% in January and gaining 3.4% in December. It surged 10% in 2022. Currently, the DG spot price is down $5.40 an ounce to $977.00.

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