Gold steady ahead of key inflation report 

Gold steady ahead of key inflation report

Gold holding steady early Wednesday ahead of key inflation report as investors awaited signals on the Federal Reserve’s next moves.

The U.S. consumer price index report for December is due out Thursday. The Fed closely watches both inflation and labor market data when determining monetary policy. The Fed has raised interest rates by 5.25 percentage points since March 2022 to curb inflation.

Front-month gold futures fell 50 cents Tuesday to settle at $2,033.00 an ounce on Comex, and the February contract slipped 0.8% in the first two days of the week. Bullion gained 0.7% last month after rising 3.2% in November and increasing 6.9% in October. The metal rose 13% in 2023. The February contract is currently up $2.90 (+0.14%) an ounce to $2035.90 and the DG spot price is $2033.70.

Gold was also little changed as both the dollar and Treasury yields held steady ahead of the inflation report. The yellow metal tends to rise when the dollar and Treasury yields slip and falls when they strengthen. 

The World Economic Forum’s global risks report is due out Wednesday and U.S. wholesale inventories come out Thursday, and both will also be closely watched by investors for signals on the state of the economy.

The minutes of the Fed’s December meeting, which came out last week, showed that central bank officials expect rates to stay high “for some time.” Higher interest rates are typically bearish for gold, making the yellow metal less attractive as an alternate investment. Conversely, rate cuts are seen as bullish for gold. The last report on the labor market, the monthly U.S. employment report for December, beat expectations last week. 

The CME FedWatch Tool shows that 95.3% of the investors it tracks are betting that the Fed will keep its federal funds rate unchanged at 5.25% to 5.50% in January, while 4.7% are expecting a 25 basis point cut, fewer than just a day earlier. But that changes in March, with the central bank widely expected to cut, with another reduction expected in May. 

Front-month silver futures fell 0.9% Tuesday to settle at $23.09 an ounce on Comex, and the March contract slid 1% in the first two days of the week. Silver dropped 6.1% in December after advancing 12% in November and increasing 2.2% in October. It ticked up 0.2% in 2023. The March contract is currently down $0.031 (-0.13%) an ounce to $23.060 and the DG spot price is $22.96

Spot palladium lost 1.4% Tuesday to $993.00 an ounce and decreased 4.9% in the first two days of the week. Palladium advanced 8.6% in December after losing 9.5% in November and dropping 10% in October. Palladium plummeted 38% last year. Currently, the DG spot price is up $19.60 an ounce to $1004.50.

Spot platinum lost 1.5% Tuesday to $939.70 an ounce and tumbled 3.2% so far this week. Platinum rose 8.1% in December after falling 0.7% in November and gaining 3.5% in October. Platinum dropped 6.8% in 2023. The DG spot price is currently down $10.60 an ounce to $929.90.

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