Gold steady amid speculation on the economy, ticking up this morning on a weaker dollar as the precious metals market continued to digest Friday’s strong U.S. jobs report.
The tightness in the labor market has increased speculation that the Federal Reserve will continue with aggressive interest rate increases at least through the end of the year to rein in runaway inflation.
While higher interest rates are bearish for gold, the underlying inflation is bullish for the haven asset. The next key economic indicator on investors’ radar is the July consumer price index report due Wednesday.
The Fed is “far from done yet” in taking steps to combat inflation, San Francisco Fed President Mary Daly said Sunday on CBS’s “Face the Nation” program. She said it’s not certain that the Fed would raise rates by 50 basis points at its next policy meeting in September amid speculation since Friday’s jobs report that it could be another 75 basis-point move. Daly isn’t a voting member this year on the policymaking Federal Open Market Committee.
Front-month gold futures rose 0.5% last week to settle at $1,791.20 an ounce on Comex, though the December contract decreased 0.9% Friday. Bullion dropped 1.4% in July after falling 2.2% in June and 3.3% in May, its worst month since September. The metal retreated 3.5% in 2021. The December contract is currently up +7.1 (+0.40%)an ounce challenging the $1,800 milestone at $1,798.30 and the DG spot price is $1,783.40.
The U.S. employers added 528,000 jobs last month, beating all economists’ estimates, and the unemployment rate fell to 3.5%, a five-decade low, according to data released Friday by the Bureau of Labor Statistics. Since recent rate hikes don’t seem to be hurting jobs growth, the Fed is likely to remain on track for a series of interest-rate increases to combat inflation.
Wednesday’s release of the U.S. consumer price index will be another key economic indicator for investors. The June CPI report showed an increase of 9.1%, while the Fed’s favorite inflation measure, the personal consumption expenditures index, in June reached the highest level since January 1982 — 6.8%.
The Fed boosted interest rates by another 75 basis points at a meeting last month, following an increase of the same size in June, as part of an effort to rein in soaring inflation. The Bank of England followed last week with its biggest single interest rate increase since 1995.
Gold has also seen support from uncertainty about whether the economy is entering a recession, tensions between the U.S. and China over Taiwan, the ongoing pandemic and the war in Ukraine.
September silver futures tumbled 1.8% last week to settle at $19.84 an ounce on Comex after the front-month contract decreased 1.4% Friday. Silver slipped 0.8% in July after declining 6.2% in June and falling 6.1% in May. It retreated 12% in 2021. Silver prices are tied to industrial demand. The September contract is currently strongly up $0.448 (+2.26%) an ounce to $20.290 and the DG spot price is $20.45.
Spot palladium increased $1.00 last week to $2,158.50. It rallied 2.9% Friday. Palladium rose 9.9% in July after losing 2.9% in June and 14% in May, the biggest monthly decline since September. It retreated 22% in 2021. Currently, the DG spot price has leapt up $86.80 an ounce to $2245.50.
Spot platinum rose 3.6% last week to $938.60 an ounce after gaining 70 cents Friday. Platinum retreated 0.3% in July after losing 7.2% in June. It dropped 9.4% last year. The current DG spot price is up $11.60 an ounce to $948.30.
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