Gold steady ahead of next week’s Fed decision

Gold steady ahead of next week's Fed decision

Gold relatively steady ahead of next week’s Fed decision. The yellow metal stuck in tight range alongside the dollar amid dueling sentiment on Federal Reserve rate hikes. 

The central bank is widely expected to boost rates again next week, but economists are increasingly forecasting that Fed policymakers may be approaching the peak of the rate-hike cycle. Higher interest rates are typically bearish for gold, because they make the yellow metal less attractive as an alternate investment. But a pause or an end to the rate hikes would be considered bullish.

June gold futures fell 1.3% last week to settle at $1,990.50 an ounce on Comex after the front-month contract decreased 1.4% Friday. Bullion gained 8.1% last month after decreasing 5.6% in February, its worst performance since June 2021. Gold increased 8.8% in the first quarter. The metal fell $2.40 in 2022. Currently, the June contract is down $3.6 (-0.18%) an ounce to $1986.90 and the DG spot price is $1976.70.

Key economic reports due this week before the Fed decision could influence the market and policymakers’ next steps, including the Fed’s favorite inflation measure, the personal consumption expenditures price index for March, due Friday. Consumer confidence data for April is due out Tuesday, followed by durable goods orders and wholesale inventories for March on Wednesday. Thursday brings first quarter GDP data and the latest information on the housing and labor markets. 

About 88.4% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at the central bank’s next policy meeting, while just 11.6% anticipate the central bank will leave rates unchanged. Fed policymakers have said they track both inflation and labor market statistics when determining monetary policy. 

The Fed has raised rates by 25 basis points twice this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November. The federal funds rate is currently at 4.75% to 5.00%. 

Front month silver futures dropped 0.7% last week to settle at $25.28 an ounce on Comex after rolling to July from May. The July contract fell 1.2% Friday. Silver increased 15% in March after retreating 12% in February. It edged up 0.5% in the first quarter. It rose 3% in 2022. The July contract is currently down $0.022 (-0.09%) an ounce to $25.140 and the DG spot price is $25.03.

Spot palladium increased 7.3% last week to $1,622.50 an ounce after rising 0.9% Friday. Palladium rose 3.7% in March after plummeting 14% in February. It fell 17% last quarter. Palladium lost 5.7% in 2022. Currently, the DG spot price is down $65.90 an ounce to $1561.50.

Spot platinum surged 8.2% last week to $1,133.10 an ounce after adding 2.7% Friday. Platinum increased 3.7% last month after falling 5.9% in February. It dropped 6.6% in the first quarter. Platinum surged 10% in 2022. The DG spot price is currently down $39.60 to $1091.10.

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.