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Gold steady early Friday ahead of consumer sentiment data, while getting a boost from slipping bond yields. The yellow metal has a volatile couple of days driven by economic news.
Prices rallied Wednesday after a report showed that inflation slowed in May, though consumer prices were up 3.3% from a year earlier, then tumbled Thursday after the Federal Reserve dialed back expectations for interest rate cuts this year. The Fed has said it closely watches inflation and the labor market when setting monetary policy. It kept interest rates unchanged again Wednesday. The prospect of continued high interest rates would be considered bearish for the yellow metal, which becomes less attractive than some other assets when rates are high.
Investors were awaiting the release of preliminary consumer sentiment data for June on Friday from the University of Michigan, along with remarks on monetary policy from the president of the Fed’s Chicago regional bank.
August gold futures fell 1.6% Thursday to settle at $2,318.00 an ounce on Comex, but the most-active contract lost 0.3% so far this week. Bullion gained 1.9% last month after rallying 2.9% in April and rising 8.9% in March – the biggest monthly gain in more than three years. May’s was the fourth consecutive monthly rally. The metal rose 13% in 2023. The August contract is currently up $27.00 (+1.16%) an ounce to $2345.00 and the DG spot price is $2332.80.
Policymakers are projecting that they will only cut interest rates once this year, a switch from the three reductions expected at the start of the year, as inflation has remained persistently high. They are now projecting four cuts in 2025, where they had previously seen three. The Fed has a 2% inflation target.
Fed Chairman Jerome Powell said Wednesday that while recent inflation reports have been “more favorable than earlier in the year,” subsequent progress has been “modest.” He added that “we’ll need to see more good data to bolster our confidence that inflation is moving sustainably toward 2%.”
The so-called “core” consumer price index, which excludes volatile food and energy prices, rose 0.2% for the month and 3.4% from a year earlier, according to data Wednesday from the Bureau of Labor Statistics. That compares with forecasts for 0.3% and 3.5%.
Thursday, U.S. weekly initial jobless claims came in at the highest level in nine months in data from the Labor Department. Applications for new unemployment claims rose to 242,000 last week, exceeding all analysts expectations.
The CME FedWatch Tool shows 85.4% of the investors tracked are betting that the Fed will keep rates unchanged in July. But 60.7% expect the central bank to start cutting in September. 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.
July silver futures dropped 4% Thursday to settle at $29.07 an ounce on Comex, and the front-month contract lost 1.3% in the first four days of the week. Silver surged 14% last month after rising 7% in April and gaining 8.9% in March. It ticked up 0.2% in 2023. The July contract is currently up $0.174 (+0.60%) an ounce to $29.240 and the DG spot price is $29.27.
Spot palladium fell 2.3% Thursday to $898.00 an ounce and has tumbled 2.8% so far this week. Palladium declined 5.1% in May after losing 5.9% in April and advancing 7.7% in March. Palladium plummeted 38% last year. Currently, the DG spot price is up $2.40 an ounce to $899.50.
Spot platinum decreased 1.6% Thursday to $958.70 an ounce and is down 1.5% so far this week. Platinum advanced 10% in May after gaining 3.1% in April and rising 3.3% in March. Platinum dropped 6.8% in 2023. The DG spot price is currently up $0.40 an ounce to $958.00.
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