Gold remains steady early Monday near record high reached at the end of last week on a softer dollar prompted by Fed speculation.
The Federal Reserve is widely expected to begin long-awaited interest rate reductions in September. 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. A cut would be considered bullish for gold, which becomes a more attractive alternate investment when rates go down.
Front-month gold futures rose 2.6% last week to settle at $2,537.80 an ounce on Comex after the most-active December contract rallied 1.8% Friday. Bullion increased 5.7% in July, its biggest monthly gain since March. Gold fell 0.3% in June and gained 1.9% in May. The metal rose 13% in 2023. The December contract is currently down $6.30 (-0.25%) an ounce to $2531.50 and the DG spot price is $2491.00.
This week, investors will be awaiting the release of the minutes of the Fed’s July policy meeting for further guidance on the expected rate cuts. Fed Chairman Jerome Powell is also scheduled to speak Friday at the central bank’s annual conference in Jackson Hole, Wyoming. Other Fed officials will be speaking earlier in the week, including Governor Christopher Waller on Monday, Atlanta Fed President Raphael Bostic and Fed Vice Chair Michael Barr on Tuesday.
Last week, the U.S. consumer price index for July came in at the lowest level since March 2021, bringing inflation closer to the Fed’s 2% target on an annualized basis. The wholesale inflation measure, the producer price index, separately showed inflation rose less than expected last month. The Fed closely watches both inflation and labor market data when determining monetary policy, particularly as concerns have mounted over a possible recession.
Investors tracked by the CME FedWatch Tool unanimously expect the Federal Reserve to begin interest rate cuts at the central bank’s next policy meeting in September. About 75.5% expect a 25 basis point cut, while the rest anticipate a 50 basis point cut.
In physical news, Reuters reported Friday that several Chinese banks had been given new quotas for gold imports in anticipation of record demand. The report was attributed to four people with knowledge of the matter.
Separately, geopolitical uncertainty surrounding the conflicts in Gaza and Ukraine kept prices elevated amid haven demand.
Front-month futures, which rolled to December from September last week, rose 6.1% last week to settle at $29.26 an ounce on Comex. The December contract increased 1.5% Friday. Silver dropped 2.1% in July after falling 2.9% in June and surging 14% in May. It ticked up 0.2% in 2023. The December contract is currently up $0.236 (+0.81%) an ounce to $29.500 and the DG spot price is $29.02.
Spot palladium added 3.9% last week to $958.50 an ounce, though it edged up just 50 cents Friday. Palladium decreased 4.3% in July after gaining 8.1% in June and declining 5.1% in May. Palladium plummeted 38% last year. Currently, the DG spot price is down $37.60 an ounce to $927.00.
Spot platinum rallied 3.2% last week to $960.60 an ounce, though it fell 0.6% Friday. Platinum lost 2.1% in July after falling 3.7% in June and advancing 10% in May. Platinum dropped 6.8% in 2023. The DG spot price is currently down $9.50 an ounce to $952.90.
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