Gold steady and little changed near record levels early Monday after surging in the previous session on Fed rate cut anticipation, after Fed Chairman Jerome Powell seemed to confirm the central bank’s plans to begin interest rate cuts next month.
Powell, speaking at the central bank’s annual conference in Jackson Hole, Wyoming, on Friday, said “the time has come” for a rate cut as inflation nears the Fed’s 2% target. Rate cuts are considered bullish for gold because they make it a more attractive investment than some other assets.
Front-month gold futures rose 0.3% last week to settle at $2,546.30 an ounce on Comex after the most-active December contract gained 1.2% Friday. Bullion is up 3% 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 $13.90 (+0.55%) an ounce to $2560.20 and the DG spot price is $2526.40.
“The time has come for policy to adjust,” Powell said Friday. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”
The central bank’s favorite inflation measure, the personal consumption expenditures price index, comes out Friday with July data. Next week will bring the closely watched U.S. monthly employment report for August. The Fed closely tracks both labor market and inflation data when crafting monetary policy.
Additional economic data due this week include durable goods orders for July on Monday, consumer confidence figures for August on Tuesday and GDP data and weekly initial jobless claims on Thursday
Powell didn’t signal how big a rate cut next month might be. 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 65.5% expect a 25 basis point cut, while the rest anticipate a 50 basis point cut.
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.
Separately, an escalation in the conflict in the Middle East over the weekend reinforced gold’s attractiveness as a haven asset against uncertainty. Israel announced what it called preemptive strikes against Hezbollah in southern Lebanon early Sunday, while Hezbollah subsequently fired barrages of rockets and drones at northern Israel.
Front-month silver futures increased 3.4% last week to settle at $30.26 an ounce on Comex after the December contract rallied 2.7% Friday. Silver is up 4.6% this month after dropping 2.1% in July and falling 2.9% in June. It ticked up 0.2% in 2023. The December contract is currently up $0.234 (+0.77%) an ounce to $30.490 and the DG spot price is $30.03.
Spot palladium gained 0.8% last week to $966.00 an ounce after surging 2.4% Friday. Palladium is up 1.9% 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 up $19.50 an ounce to $984.00.
Spot platinum rose 0.7% last week to $967.10 an ounce after increasing 1.5% Friday. Platinum is down 1.6% in August after losing 2.1% in July and falling 3.7% in June. Platinum dropped 6.8% in 2023. Currently, the DG spot price is up $16.10 to $982.20.
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