Gold Steady on Inflation Data

Gold Steady on Inflation Data

Gold steady on inflation data this morning as the markets await today’s policy statement from the Federal Reserve and amid speculation on whether the Trump administration will impose a new round of tariffs on China as scheduled on Sunday.

U.S. consumer prices rose more than expected in November, which could further support the belief that the Federal will not announce an interest rate cut at their meeting today. The Consumer Price Index is up 0.3% since October driven primarily by gasoline prices. In the 12 months through November, the CPI rose 2.1% after gaining 1.8% in October.

Before today’s CPI data, the Fed was widely expected to leave interest rates unchanged, so most of the focus will be on the Fed’s economic outlook for next year in Chairman Jerome Powell’s news conference following today’s Federal Open Market Committee meeting. The Fed has cut interest rates at the past three policy meetings, but the CME FedWatch Tool showed a 97.8% probability that the FOMC would keep rates unchanged, and there were 2.2% odds on a hike. The European Central Bank is also set to meet Thursday.

The yellow metal was also steady amid conflicting signals about whether the U.S. will delay the tariffs on China as the Trump administration attempts to reach a phase-one trade accord with Beijing. Gold increased in the first part of last week as a trade deal between the U.S. and China appeared more distant. The metal skyrocketed earlier this year as the sides squared off.

U.S. and Chinese trade negotiators are laying the groundwork for a delay of the multibillion-dollar round of new tariffs, The Wall Street Journal reported. But Trump hasn’t yet decided and has overridden his advisers on trade several times to add tariffs, the newspaper said. Bloomberg reported that Chinese officials expect a delay, but White House economic adviser Larry Kudlow pushed back on the idea.

February gold futures rose 0.2% Tuesday to settle at $1,468.10 an ounce on Comex after slipping to the lowest level in almost two weeks on Monday. Currently, the February contract is at $1,471.60.

Silver gained 0.4% Tuesday, with the March futures contract settling at $16.70 an ounce on Comex. Futures advanced 0.6% in the first two days of the week.

Spot platinum jumped 3% Tuesday, while spot palladium increased 0.9% as mines in South Africa were shutting down amid the largest power blackout in more than a decade and some major players were forced to cut production, Reuters said. Sibanye Gold Ltd., the world’s largest platinum miner, was affected, as were Impala Platinum Holdings Ltd. and Harmony Gold Mining Co. Ltd., Bloomberg reported. Tuesday was the sixth straight day of rolling blackouts as South Africa’s utility Eskom grapples with breakdowns and faults at two giant power stations.

In economic news for the remainder of the week, investors will likely watch for U.S. initial jobless claims on Thursday and U.S. monthly GDP numbers on Friday.


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 as 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.