Gold was little changed early Wednesday holding steady on holiday trading as the U.S. Juneteenth observance shuttered many financial markets. The yellow metal getting support from the softer U.S. retail sales data released yesterday that boosted expectations that the Federal Reserve will cut interest rates this year.
Comex gold trades will post on Thursday because of the holiday Wednesday. The dollar was little changed, and there’s no trading of Treasurys globally because of the holiday.
August gold futures rose 0.8% Tuesday to settle at $2,346.90 an ounce on Comex and the most-active contract edged up 0.9% in the first two days of the week. Bullion gained 1.9% last month after rallying 2.9% in April and rising 8.9% in March – the biggest monthly gain in more than three years. May’s was the fourth consecutive monthly rally. The metal rose 13% in 2023. The August contract is currently down $3.40 (-0.14%) an ounce to $2343.50 and the DG spot price is $2326.80.
A number of Federal Reserve officials spoke Tuesday and indicated that the central bank will likely need to see more evidence of cooling inflation before it will begin interest rate cuts. The prospect of continued high interest rates would be considered bearish for the yellow metal, which becomes less attractive than some other assets when rates are elevated.
St. Louis Fed President Alberto Musalem said it could take “quarters” for a cut to occur, while Fed Governor Adriana Kugler said it will likely be appropriate “sometime later this year.”
The Fed has a 2% inflation target. The consumer price index report last week showed that inflation slowed in May, though consumer prices were up 3.3% from a year earlier. The Fed has said it closely watches inflation and the labor market when setting monetary policy. It kept interest rates unchanged again last week.
The CME FedWatch Tool shows 89.7% of the investors tracked are betting that the Fed will keep rates unchanged in July. But 67% expect the central bank to start cutting in September. The Fed has kept interest rates steady at 5.25% to 5.50% for about a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
In economic news, U.S. retail sales increased less than expected in May, according to data released Tuesday, reinforcing expectations of a rate cut this year. But U.S. industrial production surged last month, increasing more than analysts forecast.
U.K. inflation data come out Wednesday, followed by a Bank of England policy decision Thursday. The central bank is widely expected to hold rates unchanged. U.S. initial jobless claims for last week also come out on Thursday, along with housing starts. Existing home sales and the index of leading economic indicators comes out Friday.
September silver futures gained 0.6% Tuesday to settle at $29.88 an ounce on Comex. The front-month contract, which rolled to September from July this week, rallied 1.5% in the first two days of the week. Silver surged 14% last month after rising 7% in April and gaining 8.9% in March. It ticked up 0.2% in 2023. The July contract is currently up $0.066 (+0.22%) an ounce to $29.630 and the DG spot price is $29.56.
Spot palladium added $1 Tuesday to $902.00 an ounce, though it dropped 2.3% in the first two days of the week. Palladium declined 5.1% in May after losing 5.9% in April and advancing 7.7% in March. Palladium plummeted 38% last year. Currently, the DG spot price is up $16.00 an ounce to $914.50.
Spot platinum increased 0.7% Tuesday to $981.70 an ounce and is up 0.8% so far this week. Platinum advanced 10% in May after gaining 3.1% in April and rising 3.3% in March. Platinum dropped 6.8% in 2023. The DG spot price is currently up $6.60 an ounce to $986.80.
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