Gold steady as investors brace for the Fed decision this afternoon. The yellow metal slipped below the $2,000-an-ounce level earlier Wednesday.
The ADP employment report increased modestly in October but missed expectations. The payrolls processing firm said that companies added 113,000 workers for the month, higher than the unrevised 89,000 in September but below the forecasted 130,000 jobs. A good sign for inflation watchers, ADP said pay increased the smallest annual gain since October 2021, up 5.7% from a year ago.
Gold has surged the past few weeks on haven demand stemming from the escalating conflict in the Middle East and expectations that the Fed may be coming to the end of its cycle of interest rate hikes, which are considered bearish for the precious metal. But profit taking and the likelihood that the Fed will leave rates high for some time kept gold under pressure.
The Fed has raised rates by 5.25 percentage points since March 2022 in an effort to curb inflation. The core personal consumption expenditures price index, the Fed’s favorite inflation measure, accelerated to a four-month high in September as consumer spending picked up, data released Friday showed. But the central bank is expected to keep interest rates unchanged at 5.25% to 5.50% Wednesday, following a pause in September.
Front-month gold futures dropped 0.6% Tuesday to settle at $1,994.30 an ounce on Comex, and the December contract slid 0.2% in the first two days of the week. Bullion gained 6.9% in October after falling 5.1% in September and dropping 2.2% in August. The metal is up 9.2% in 2023. The December contract is currently up $3.20 (+0.16%) an ounce to $1997.50 and the DG spot price is $1990.50.
About 99.2% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged Wednesday, while .8% expect it to raise rates by 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold.
U.S. consumers were slightly less confident in the economy in October, as the Conference Board’s index showed Tuesday fell to a five-month low last month. It was the third straight monthly decline.
In other economic news, third-quarter productivity data come out Thursday along with weekly initial jobless claims. Then the key U.S. monthly jobs report for October comes out Friday.
Meanwhile, the conflict in the Middle East escalated as Israeli airstrikes hit a densely populated refugee camp in the Gaza Strip, reportedly killing a large number of people, including a Hamas commander.
Front-month silver futures decreased 1.9% Tuesday to settle at $22.95 an ounce on Comex, though the December contract rose 0.3% in the first two days of the week. Silver increased 2.2% last month after decreasing 9.5% in September and slipping 0.6% in August. It’s down 4.5% in 2023. The December contract is currently up $0.003 (+0.01%) an ounce to $22.955 and the DG spot price is $22.94.
Spot palladium slipped 0.2% Tuesday to $1,136.50 an ounce, though it rose 0.2% in the first two days of the week. Palladium dropped 10% in October after rising 3% in September and sliding 5.3% in August. Palladium has plummeted 37% so far this year. Currently, the DG spot price is up $10.90 an ounce to $1142.00.
Spot platinum advanced 0.3% Tuesday to $942.50 an ounce, and it rallied 4% in the first two days of the week. Platinum gained 3.5% in October after declining 6.6% last month and advancing 1.7% in August. Platinum is down 12% in 2023. The DG spot price is down $9.50 an ounce to $934.40.
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.