Gold steady early Friday ahead of Powell remarks and remained above $2,500 an ounce after sliding from near-record levels in the previous session.
Investors are awaiting Fed Chairman Jerome Powell’s scheduled remarks Friday at the central bank’s annual conference in Jackson Hole, Wyoming, for further direction. They’ll be closely parsing his comments for further signals on the timeline and size of the Fed’s long-expected interest rate cuts. Rate cuts are considered bullish for gold because they make it a more attractive investment than some other assets.
An unexpected interest in the employment rate caused the yellow metal to decline so far this week, though gold remains up 21% so far this year.
Front-month gold futures fell 1.2% Thursday to settle at $2,516.70 an ounce on Comex, and the most-active December contract slid 0.8% in the first four days of the week. Bullion is up 1.8% in August after increasing 5.7% in July, its biggest monthly gain since March. Gold fell 0.3% in June. The metal rose 13% in 2023. The December contract is currently up $20.40 (+0.81%) an ounce to $2537.10 and the DG spot price is $2501.70.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.13% Thursday, Reuters reported.
Philadelphia Fed President Patrick Harker told Reuters on Thursday that he thinks the central bank needs “to start this process” of interest rate cuts starting next month, “barring any surprise in the data we’ll get between now and then.”
Earlier in the week, the minutes of the Fed’s July policy meeting pointed to a “likely” rate cut in September, with “the vast majority” of participants observing “that, if the data continued to come in as expected, it would likely be appropriate to ease policy at the next meeting.”
The Fed closely tracks both labor market and inflation data when crafting monetary policy. U.S. job growth was far weaker than initially reported, data from the Bureau of Labor Statistics’ preliminary annual benchmark review of employment showed earlier this week.
The central bank’s favorite inflation measure, the personal consumption expenditures price index, comes out in a week with July data. The following week will bring the closely watched U.S. monthly employment report for August.
The Fed has kept interest rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation. Investors tracked by the CME FedWatch Tool unanimously expect the Fed to begin interest rate cuts at the central bank’s next policy meeting in September. About 73.5% expect a 25 basis point cut, while the rest anticipate a 50 basis point cut.
Separately, a new round of Israel-Hamas ceasefire talks was poised to begin in Cairo, in an international attempt to prevent a regional escalation in the conflict. Gold frequently sees haven demand at times of geopolitical unrest, so progress in the talks would be considered bearish for gold.
Front-month silver futures dropped 1.8% Thursday to settle at $29.42 an ounce on Comex, but the December contract increased 0.5% in the first four days of the week. Silver is up 1.7% this month after dropping 2.1% in July and falling 2.9% in June. It ticked up 0.2% in 2023. The current DG spot price is up $3.00 to $948.50. The December contract is currently up $0.409 (+1.39%) an ounce to $29.880 and the DG spot price is $29.33.
Spot palladium declined 1.7% Thursday to $943.50 an ounce and is down 1.6% so far this week. Palladium is down 0.5% this month after decreasing 4.3% in July and gaining 8.1% in June. Palladium plummeted 38% last year. The DG spot price is currently down $5.00 an ounce to $948.70.
Spot platinum fell 2% Thursday to $953.30 an ounce and slipped 0.8% so far this week. Platinum is down 3% in August after losing 2.1% in July and falling 3.7% in June. Platinum dropped 6.8% in 2023.
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