Gold tips slightly down on strong U.S. housing data, sticking above the key $1,900 support level early Wednesday as Treasury yield rose amid speculation that the Federal Reserve may increase interest rates further.
In July, U.S. single-family homebuilding surged as the nation continues an acute shortage of previously owned houses. Single-family housing starts, the largest sector of homebuilding, jumped 6.7% last month, per Commerce Department.
Investors are awaiting further direction from the minutes of the last Fed policy meeting, due out Wednesday. Further rate hikes would be considered bearish for gold because they would make the yellow metal less attractive as an alternate investment. The central bank’s next policy meeting is scheduled for September.
Front-month gold futures fell 0.5% Tuesday to settle at $1,935.20 an ounce on Comex, and the December contract lost 0.6% in the first two days of the week. Bullion rose 4.1% in July after losing 2.7% in June and retreating 0.9% in May. The metal gained 5.7% in the first half of the year after falling $2.40 in 2022. The December contract is currently down $1.6 (-0.08%) an ounce to $1933.60 and the DG spot price is $1904.30.
The yellow metal breached the $1,900 support level for the first time in a month and a half in intraday trading this week, pressured by the strong bond yields and a strong dollar.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, touched the lowest level since January 2020, extending recent declines, Reuters reported.
A series of positive economic reports has lent support to the idea that the Fed has more room to raise rates to combat high inflation. In the latest, U.S. retail sales increased more than expected in July, according to a report out Tuesday. Last week, the consumer price index came in better than expected.
Still, about 88.5% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in September at 5.25% to 5.50%. Just 11.5% expect it to raise rates another 25 basis points. The central bank has raised rates by 5.25 percentage points since March 2022 in an effort to rein in inflation.
December silver futures dropped 0.3% Tuesday to settle at $22.97 an ounce on Comex. The rolling front month, which moved into December from September this week, was up 1% from the end of last week. Silver gained 8.5% in July after dropping 2.4% in June and decreasing 6.5% in May. It retreated 4.2% in the first half of the year after rising 3% in 2022. The December contract is up $0.017 (+0.07%) an ounce to $22.990 and the DG spot price is $22.72.
Spot palladium decreased 2.7% Tuesday to $1,250.00 an ounce and is down 5.6% so far this week. Palladium rose 3.6% in July after falling 9.5% in June and tumbling 9.3% in May. Palladium plummeted 31% in the first half of the year after losing 5.7% in 2022. Currently, the DG spot price is down $7.10 an ounce to $1247.00.
Spot platinum fell 1.4% Tuesday to $897.40 an ounce and has lost 2.2% this week. Platinum gained 5.2% in July after falling 9.3% in June and retreating 7.4% in May. Platinum dropped 15% in the first half of the year after surging 10% in 2022. The DG spot price is currently up $3.60 an ounce to $900.80.
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