Gold ticks up in Friday morning trading as investors digest the release of this morning’s mild PPI report showing easing key inflation for September.
The producer price index showed no change in September, per the Labor Department’s report, pointing to a continued easing in inflation. The PPI, a measure of what producers get for their goods and services, was flat for the month and up 1.8% from a year ago. Economists had forecast a monthly gain of 0.1% after August’s increase of 0.2%. The flat inflation number supports hopes for a bigger Fed rate cut which would be bullish for gold.
The U.S. consumer price index increased more than expected last month, according to data released Thursday, while weekly initial jobless claims reached the highest level since August 2023.
The dollar index fell from a two-month high, supporting gold Friday along with geopolitical risk surrounding the conflict in the Middle East.
Front-month gold futures rose 0.5% Thursday to settle at $2,639.30 an ounce on Comex, though the most-active December contract is down 1.1% so far this week. Bullion gained 5.2% last month after advancing 2.2% in August and increasing 5.7% in July, its biggest monthly gain since March. The metal rose 13% in 2023. The December contract is currently up $28.7 (+1.09%) an ounce to $2668.80 and the DG spot price is $2651.50.
Consumer prices excluding volatile food and energy costs – so-called core CPI – rose a seasonally adjusted 0.3% last month, putting the annual rate at 3.3%, according to data released Thursday. Headline CPI reached 0.2% for the month and 2.4% on an annual basis. All the readings, for both core and headline CPI, were 0.1 percentage point above economists’ expectations. But the annual inflation rate of 2.4% was still the lowest level since February 2021.
U.S. weekly initial jobless claims increased 33,000 to 258,000 last week, according to separate data from the Labor Department. The figure was the highest in 14 months.
The Fed has said it closely watches both labor market and inflation data when determining monetary policy.
Fed policymakers were divided on how much to cut interest rates last month, according to minutes of the central bank’s September policy meeting, which came out Wednesday. They ultimately announced they were lowering interest rates by 50 basis points last month to 4.75% to 5.00%. The Fed had kept them at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
“Some participants noted that a 25 basis point reduction would be in line with a gradual path of policy normalization that would allow policymakers time to assess the degree of policy restrictiveness as the economy evolved,” the minutes stated. “A few participants also added that a 25 basis point move could signal a more predictable path of policy normalization.”
Most investors tracked by the CME FedWatch Tool expect the Fed to cut rates again in November, and 82.9% anticipate a 25 basis point reduction. The rest are betting on the Fed to hold rates unchanged. The central bank has two scheduled policy meetings left this year.
Front-month silver futures increased 1.9% Thursday to $31.24 an ounce on Comex, though the December contract is down 3.6% so far this week. Silver rallied 7.9% in September after gaining 0.7% in August and dropping 2.1% in July. It ticked up 0.2% in 2023. The December contract is currently up $0.425 (+1.36%) an ounce to $31.665 and the DG spot price is $31.47.
Spot palladium gained 2.9% Thursday to $1,082.50 an ounce, and it rose 7% in the first four days of the week. Palladium gained 3.2% in September after increasing 3.2% in August and decreasing 4.3% in July. Palladium plummeted 38% last year. Currently, the DG spot price is up $0.30 an ounce to $1081.10.
Spot platinum rallied 1.8% Thursday to $974.20 an ounce but is down 2.2% in the first four days of the week. Platinum increased 5.6% last month after sliding 5.2% in August and losing 2.1% in July. Platinum dropped 6.8% in 2023. The current DG spot price is up $12.50 an ounce to $985.70.
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