Gold ticks up as the dollar eases, trading in a tight range with the bullion sticking close to the $1800 mark.
Prices for the yellow metal tumbled the most in a single week since mid-November last week after Federal Reserve Chairman Jerome Powell said that the central bank would maintain its aggressive monetary policy in 2023 tame 40-year highs in inflation despite some investors’ fears of a recession.
The Fed raised U.S. interest rates to the highest level in 15 years last week. Its 50 basis point rate hike was followed by the European Central Bank and the Bank of England. The Bank of Japan is due to make an interest rate decision Tuesday.
Front-month gold futures fell 0.6% last week to settle at $1,800.20 an ounce on Comex, though the February contract rose 0.7% Friday. Bullion increased 7.3% in November, its first monthly rally since March. The metal is down 1.6% this year. The February contract is currently slightly up $1.40 (+0.08%)and ounce to $1801.60 and the DG spot price is $1792.10.
The Fed raised rates to 4.25% to 4.5% last week, and Fed policymakers indicated that they anticipate increasing the rate to 5% to 5.25% by the end of 2023. The central bank has boosted rates by 425 basis points this calendar year.
The December rate increase was the smallest in some time, after the Fed raised rates by 75 basis points each in June, July, September and November. Higher interest rates are typically bearish for gold, which becomes less attractive as an alternative investment.
Investors tracked by the CME FedWatch Tool are betting there’s a 66.2% chance the Fed will boost interest rates by just 25 basis points at policymakers’ next meeting Feb. 1. The odds are 33.9% in favor of another 50 basis point hike.
Investors will continue to closely monitor economic news to determine the Fed’s next steps and the state of the economy. Reports this week include the consumer confidence index and existing home sales Wednesday, weekly initial jobless claims and the index of leading economic indicators Thursday and the PCE price index and University of Michigan consumer sentiment Friday.
Front-month silver futures lost 1.6% last week to settle at $23.33 an ounce on Comex, though the March contract edged up 0.1% Friday. Silver increased 14% in November, its biggest monthly gain since December 2020. It’s down 0.1% this year. The March contract is currently up $0.117 (+0.50%) an ounce to $23.445 and the DG spot price is $23.26.
Spot palladium tumbled 12% last week to $1,739.00 an ounce after dropping 4.2% Friday. Palladium rose 0.3% last month after declining 15% in October. It’s down 9.2% in 2022. The DG spot price is currently up $12.40 an ounce to $1744.00
Spot platinum decreased 3.1% last week to $1,000.40 an ounce after it retreated 1.3% Friday. Platinum gained 11% in November, its best month since February 2021. It’s up 2.8% this year. Currently, the DG spot price is flat at $1001.00.
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