Gold subdued ahead of Powell remarks

Gold subdued ahead of Powell remarks

Gold fairly subdued near a three-month low early Wednesday ahead of Federal Reserve Chairman Jerome Powell remarks.

The Fed chairman is scheduled to speak, along with other central bank officials, at a European Central Bank Forum on central banking in Portugal. Investors will be listening closely for indications on additional interest rate increases and guidance on the state of the economy. The anticipated rate hikes are typically bearish for gold.

August gold futures dropped 0.5% Tuesday to settle at $1,923.80 an ounce on Comex, and the front-month contract is down 0.3% this week. Bullion is down 2.9% this month after retreating 0.9% in May and increasing 0.6% in April. The metal fell $2.40 in 2022. The August contract is currently down $5.20 (-0.27%) an ounce to $1918.60 and the DG spot price is $1904.80.

A key economic report that could drive the Fed’s next monetary policy decision comes out Thursday – the personal consumption expenditure price index, the Fed’s favorite inflation measure, with May data. Policymakers have said they closely watch data on inflation and monetary policy when making rate decisions. 

The monthly U.S. employment report for June comes out next week, after markets close for the July Fourth holiday. The minutes of the last Fed policy meeting are set for release July 5 and are bound to be parsed closely. The central bank left its benchmark federal funds rate at 5.00% to 5.25% earlier this month, its first pause after 10 consecutive rate increases to combat inflation.

About 76.9% of investors tracked by the CME FedWatch Tool are betting that the Fed will raise interest rates by 25 basis points at its July monetary policy meeting, while 23.1% expect it to keep rates unchanged. The Fed has increased rates by 25 basis points three times this year following hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022 and smaller increases in March and May of last year. The rate hikes have totaled 5 percentage points since March 2022.

September silver futures rose 0.5% Tuesday to settle at $23.15 an ounce on Comex after the most-active contract rallied 2.7% in the first two days of the week. Silver is down 1.9% in June after decreasing 6.5% in May and gaining 4.4% in April. It rose 3% in 2022. The September contract is currently down $0.228 (-0.98%) an ounce to $22.920 and the DG spot price is $22.70.

Spot palladium decreased 1.2% Tuesday to $1,320.00 an ounce, though it increased 1.2% so far this week. Palladium is down 4.6% this month after falling 9.3% in May and rising 2% in April. Palladium lost 5.7% in 2022. The DG spot price is down $88.60 an ounce to $1230.50.

Spot platinum slipped 50 cents Tuesday to $933.80 an ounce but is up 0.7% so far this week. Platinum is down 7.1% in June after retreating 7.4% in May and adding 8.5% in April. Platinum surged 10% in 2022. The current DG spot price is down $23.40 an ounce to $909.60.

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