Gold ticks up on mild inflation report after hitting its lowest point in nearly two-months in the previous trading session. The yellow metal had already regained ground near the $2600 benchmark in early morning bargain hunting.
The consumer price index rose 0.2% in October, that takes the 12-month inflation rate up to 2.6%. This is inline with expectations.
Next up, the release of the producer price index on Thursday. The Fed closely watches both inflation and labor market data when setting monetary policy. Investors also will be closely following remarks from the presidents of the New York, Dallas, St. Louis and Kansas City Feds on Wednesday.
Markets were volatile this week because of U.S. President-elect Donald Trump’s proposed tariffs and their potential to increase inflation.
Front-month gold futures fell 0.4% Tuesday to settle at $2,606.30 an ounce on Comex, and the most-active December contract slid 3.3% in the first two days of the week. Bullion rose 3.4% in October after gaining 5.2% in September and advancing 2.2% in August. The metal is up 26% in 2024. The December contract is currently down $1.3 (-0.05%) an ounce to $2605.00 and the DG spot price is $2597.90.
The Fed cut interest rates last week, bolstering gold’s appeal as an alternate investment. It was the second rate cut this year. The central bank began raising rates during the pandemic to combat surging inflation.
Richmond Fed President Tom Barkin said Tuesday that the economy is in a good place, but the labor market bears watching. He added that the central bank is well positioned to respond to economic changes. Fed Chairman Jerome Powell and other central bank officials are scheduled to speak Thursday.
The Fed reduced its benchmark federal funds rate by 25 basis points last week to 4.50% to 4.75%, in line with economists’ expectations. Lower interest rates are typically considered bullish for gold. The move followed a 50 basis point reduction in September. The Fed had previously kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022.
Most investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by another 25 basis points in December, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged next month.
Front-month silver futures rose 0.5% Tuesday to $30.76 an ounce on Comex, and the December contract decreased 2.2% in the first two days of the week. Silver advanced 4.3% in October after rallying 7.9% in September and gaining 0.7% in August. It’s up 28% in 2024. The December contract is currently down $0.014 (-0.05%) an ounce to $30.745 and the DG spot price is $30.72.
Spot palladium dropped 3.7% Tuesday to $948.86 an ounce, and it’s down 5.3% so far this week. Palladium increased 11% in October after gaining 3.2% in September and rising 3.2% in August. Palladium is down 15% this year. Currently, the DG spot price is down $7.40 an ounce to $943.50.
Spot platinum retreated 1.9% Tuesday to $948.75 an ounce and retreated 2.8% so far this week. Platinum rose 1.5% in October after increasing 5.6% in September and sliding 5.2% in August. Platinum is down 4.9% this year. The DG spot price is currently down $5.70 an ounce to $943.50.
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