Gold steady ahead of economic reports 

Gold steady ahead of economic reports

Gold relatively steady, tipping up slightly early Monday, shrugging off the comments from Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde last week that interest rates should remain high, bolstered by the possibility of upcoming weak economic reports.

Powell said Friday at the Fed’s annual conference in Jackson Hole, Wyoming, that the central bank is ready to raise interest rates again in its quest for 2% inflation, a process he noted “still has a long way to go, even with favorable recent readings.” But he also indicated that the Fed could hold rates steady next month.

Key inflation, jobs and consumer confidence reports due out at the end of this week may drive the Fed’s rate decision in September. Higher interest rates are typically bearish for gold, so an end or a pause to rate hikes would give precious metals a boost. 

Front-month gold futures rallied 1.2% last week to settle at $1,939.90 an ounce on Comex, though the December contract slipped 0.4% Friday. Bullion is down 3.5% in August after rising 4.1% in July and losing 2.7% in June. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. the December contract is currently up $3.70 (+0.19%) an ounce to $1943.60 and the DG spot price is $1917.50.

Powell, Lagarde and Bank of England Deputy Governor Ben Broadbent all indicated last week that interest rates might have to rise further. The Fed has raised rates by 5.25 percentage points since March 2022 to curb inflation. 

About 80.5% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in September at 5.25% to 5.50%. Just 19.5% expect it to raise rates another 25 basis points. 

Ultimately, however, the state of the economy and the labor market will likely drive its next moves. 

The Fed’s favorite inflation measure, the personal consumption expenditures price index, comes out Thursday with July data. 

Then the monthly U.S. jobs report is scheduled to come out Friday. Just before it, weekly initial jobless claims for last week will be released Thursday and the August ADP employment report will come out Wednesday. The Fed pays close attention to the labor market in particular to determine whether its rate hikes are having a detrimental effect on the economy.

Front-month silver futures surged 6.6% last week to settle at $24.58 an ounce on Comex after the December contract added 0.8 cent Friday. Silver is down 1.6% this month after advancing 8.5% in July and dropping 2.4% in June. It retreated 4.2% in the first half of the year after rising 3% in 2022. The December contract is currently up $0.013 (-0.05%) an ounce to $24.570 and the DG spot price is $24.22.

Spot palladium decreased 2.5% last week to $1,241.00 an ounce, after it dropped 0.9% Friday. Palladium is down 4.3% this month after rising 3.6% in July and falling 9.5% in June. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. The current DG spot price is up $22.20 an ounce to $1263.00.

Spot platinum rose 3.6% last week to $951.40 after increasing 0.5% Friday. Platinum is down 0.7% this month after gaining 5.2% in July and falling 9.3% in June. Platinum dropped 15% in the first half of the year after surging 10% in 2022. Currently, the DG spot price is up $9.60 an ounce to $959.00.

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