Gold sticks near all-time high

Gold sticks near all-time high

Gold sticks near all-time high, remaining solidly above the $2,100 an ounce threshold early Wednesday, boosted by this morning’s jobs report, as investors awaited testimony from Federal Reserve Chairman Jerome Powell. 

For February, 140,000 positions were added by private U.S. companies, that’s a bit below the Dow Jones estimate of 150,000. This ADP report precedes Friday’s release of the Labor Department’s more closely watched nonfarm payrolls release.

Anticipation of coming interest rate cuts is fueling gold’s recent rally. Lower interest rates are considered bullish for the yellow metal, making it a more attractive asset for investors. Gold also has support from haven demand related to the conflict in the Middle East. 

Front-month gold futures rose 0.7% Tuesday to settle at $2,141.90 an ounce on Comex, and the most-active April contract gained 2.2% during the first two days of the week. Bullion dropped 0.6% in February after declining 0.2% in January and gaining 0.7% in December. The metal rose 13% in 2023. The April contract is currently up $12.90 (+0.60%) an ounce to $2154.80 and the DG spot price is $2145.20.

Powell is set to testify before Congress on Wednesday and Thursday amid speculation that the Fed will cut interest rates in June, ending its two-year effort to tame inflation. The markets will be watching the congressionally mandated appearances for more information on how the Fed plans to begin implementing rate cuts. 

The monthly jobs report for February comes out Friday from the Labor Department. But before that, the private payrolls report from ADP comes out Wednesday, followed by weekly initial jobless claims from the Labor Department on Thursday. The Fed closely tracks both labor market and inflation data when determining monetary policy. 

Atlanta Fed President Raphael Bostic said in comments published this week that he expects the central bank to pause after the first rate cut to gauge its economic impact. He’s estimated that cuts will begin in the third quarter. 

About 97% of the investors tracked by the CME FedWatch Tool are betting that the Fed will keep rates unchanged this month, while 3% expect a 25 basis point cut. Most investors tracked by the tool also anticipate the Fed will hold rates steady at the following policy meeting in May. Most are now looking to June for a rate cut. 

The central bank has raised interest rates by 5.25 percentage points since March 2022 in an effort to cut inflation, but kept rates unchanged at 5.25% to 5.50% at its last meeting. 

The Fed is targeting 2% inflation. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came in in line with economists’ estimates last week. Excluding volatile food and energy costs, so-called core-PCE increased 0.4% month on month in January and 2.8% from a year earlier. Top-line PCE, including food and energy costs, increased 0.3% for the month and 2.4% on a 12-month basis. 

In other news, more than a dozen U.S. states held Democratic and Republican primary elections Tuesday, which were overwhelmingly won by incumbent President Joe Biden and his predecessor, former President Donald Trump. The primaries take the two a giant step closer to facing off in the general election in November. 

Front-month silver futures slipped 0.7 cent Tuesday to settle at $23.98 an ounce on Comex, though the May contract rallied 2.7% in the first two days of the week. Silver lost 1.2% in February after falling 3.8% in January and dropping 6.1% in December. It ticked up 0.2% in 2023. The May contract is currently up $0.306 (+1.28%) an ounce to $24.290 and the DG spot price is $24.06.

Spot palladium decreased 1.3% Tuesday to $961.00 an ounce and is down 0.7% so far this week. Palladium fell 4.6% in February after tumbling 11% in January and advancing 8.6% in December. Palladium plummeted 38% last year. Currently, the DG spot price is up $80.60 an ounce to $1035.50.

Spot platinum slid 1.7% Tuesday to $889.10 an ounce and is down 0.2% so far this week. Platinum decreased 4.9% in February after falling 8% in January and rising 8.1% in December. Platinum dropped 6.8% in 2023. The DG spot price is currently up $16.90 an ounce to $906.10.

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