Gold ticks up as the dollar slips early Friday, but the bullion is still headed for the biggest weekly drop since February as optimism that lawmakers would reach an agreement to raise the U.S. debt ceiling reduced haven demand for the precious metal.
U.S. President Joe Biden, who is in Japan, received an update Friday from Democratic negotiators that they’re making “steady progress” in talks with Republicans to avoid sending the nation’s $31.4 trillion debt into default. The S&P 500 climbed to the highest level this year Thursday in anticipation of an agreement.
August gold futures fell 1.3% Thursday to settle at $1,978.30 an ounce on Comex. The front-month contract, which rolled to August from June this week, was down 2.1% in the first four days of the week. Bullion increased 0.6% in April after gaining 8.1% in March. The metal fell $2.40 in 2022. The August contract is currently up $1.7 (+0.09%) an ounce to $1980.00 and the DG spot price is $1961.40.
Recent comments from Federal Reserve officials about continued interest rate hikes to rein in inflation also pressured gold. Investors are awaiting scheduled remarks Friday from Fed President Jerome Powell for further direction.
Higher interest rates are typically bearish for gold, because they make the yellow metal less attractive as an alternate investment, but a pause or an end to the rate hikes would be bullish.
Dallas Federal Reserve President Lorie Logan said Thursday that she’s not yet ready to halt the hikes but that a skip – holding rates unchanged – in June might be a possibility. “The data in coming weeks could yet show that it is appropriate to skip a meeting,” she said in San Antonio. “As of today, though, we aren’t there yet.” She pointed to recent high inflation figures. Fed officials have said they consider labor market conditions and inflation data when making monetary policy decisions.
Atlanta Fed President Raphael Bostic said Tuesday that keeping rates unchanged in June wouldn’t necessarily mean the Fed was done raising rates. “A pause could be a skip or it could be a hold,” he said Tuesday in Florida.
About 62% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep interest rates unchanged at the next meeting in June, while 38% expect another 25 basis point rate hike. A week ago, 89.3% of investors tracked by the tool expected rates to remain unchanged.
The Fed raised rates by another 25 basis points earlier this month. The Fed has raised rates by 25 basis points three times this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022. The federal funds rate is currently at 5.00% to 5.25%.
July silver futures dropped 1.1% Thursday to settle at $23.63 an ounce on Comex, and the front-month contract fell 2.2% in the first four days of the week. Silver gained 4.4% in April after increasing 15% in March. It rose 3% in 2022. The July contract is currently up $0.102 (+0.43%) an ounce to $23.735 and the DG spot price is $23.73
Spot palladium decreased 2% Thursday to $1,482.00 an ounce and dropped 3.8% so far this week. Palladium rose 2% last month after rising 3.7% in March. Palladium lost 5.7% in 2022. Currently, the DG spot price is up $64.30 an ounce to $1539.50.
Spot platinum lost 2% Thursday to $1,057.00 an ounce and is down 0.7% this week. Platinum added 8.5% in April after increasing 3.7% in March. Platinum surged 10% in 2022. The current DG spot price is up $12.50 an ounce to $1070.70.
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