Gold Steady On Weaker Dollar

Gold Steady On Weaker Dollar

Gold steady around $1750 an ounce on a weaker dollar as markets react to growing protests in China against the government’s zero-COVID policy.

Protests in China spread to multiple cities Monday as people have become fed up with restrictions on the movement of people to limit the spread of the coronavirus.

Front-month gold futures slipped 20 cents last week to settle at $1,768.80 an ounce on Comex. The February contract rose 0.5% Friday. U.S. financial markets were closed Thursday and settled early Friday for the Thanksgiving holiday, and trading volumes were light all last week. Bullion is up 7.8% so far this month after falling 1.9% in October, its seventh straight month of declines. The metal is down 3.3% this year. Currently, the December contract is down $4.2 (-0.24%) an ounce to $1749.80 and the DG spot price is $1751.70.

Investors are awaiting a series of key economic reports this week and remarks from Federal Reserve President Jerome Powell on the state of the economy for further direction.

The minutes of last month’s meeting of Fed policymakers, released Wednesday, showed that officials are considering slowing the pace of a series of interest rate increases to curb 40-year highs in inflation. 

The Fed has raised interest rates by 375 basis points this calendar year to 3.75% to 4%. There were increases of 75 basis points each in June, July, September, and November. High rates are typically bearish for gold because they make the yellow metal less attractive than other assets.

“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes of the November meeting stated. Policymakers’ next rate decision comes out Dec. 14. 

Investors are betting there’s a 73.5% chance the Fed will raise interest rates by 50 basis points in December, compared with 58.9% a month ago. About 26.5% of investors tracked by the CME FedWatch Tool are projecting a 75-basis-point hike, compared with 34.1% a month ago. 

St. Louis Fed President James Bullard and New York Fed President John Williams are scheduled to speak Monday, while Powell is scheduled to speak Wednesday.

The Fed’s favorite inflation measure, the personal consumption expenditures price index for October, is set for release Thursday, along with the ISM manufacturing index for November. Friday brings the critical U.S. jobs report for November, though the foreshadowing ADP employment report will be released Wednesday, and initial jobless claims for last week come out from the Labor Department on Thursday.

Investors will also be closely watching initial holiday sales for indications on how much consumers are willing to spend amid high inflation.

Front-month silver futures rose 2% last week to settle at $21.61 an ounce on Comex after the March contract gained 0.4% Friday. Silver is up 13% this month after advancing 0.4% in October, its second consecutive monthly increase. It’s down 7.5% this year. The December contract is currently up $0.035 (+0.16%) an ounce to $21.465 and the DG spot price is $21.48.

Spot palladium retreated 5.6% last week to $1,864.00 an ounce after dropping 2.3% Friday. Palladium is down 0.5% this month after declining 15% in October. It’s down 2.7% in 2022. Currently, the DG spot price is up $25.20 an ounce to $1876.00.

Spot platinum decreased 0.2% last week to $986.40 an ounce after tumbling 1.2% Friday. Platinum is up 5.3% this month after gaining 7.3% in October. It’s up 1.4% this year. The current DG spot price is up $17.80 an ounce to $1007.60.

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