Gold tips up on weakened dollar as investors await Tuesday’s release of a key inflation report that’s seen as the final bit of critical data due before the Federal Reserve’s monetary policy meeting next week.
The dollar held near recent lows, bolstering the yellow metal. Gold capped its first weekly gain in four on Friday. But the prospect of a big bump up in interest rates was bearish for the precious metal and kept a lid on prices.
Front-month gold futures rose 0.4% last week to settle at $1,728.60 an ounce on Comex after the December contract increased 0.5% Friday. Bullion dropped 3.1% in August after declining 1.4% in July. The metal retreated 3.5% in 2021. Currently, the December contract is up $6.7 (+0.39%) to 1735.30 and the DG spot price is $1726.20.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 0.16% Friday to 966.64 metric tons from 968.15 metric tons Thursday, Reuters reported.
Speculators cut net long positions in Comex gold by 19,510 contracts to 1,217 in the week ended Sept. 6, the U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders report showed Friday. Net short positions increased in Comex silver.
Investors are awaiting Tuesday’s release of the U.S. consumer price index data for August, which is expected to show that prices rose 8.1% year on year, compared with 8.5% in July. The report, examined in conjunction with recent positive employment and consumer spending data, is likely to shape the Fed’s next moves.
The Fed raised rates by 75 basis points each in June and July and has increased rates by 225 basis points this year to combat surging inflation. The European Central Bank also raised rates by 75 basis points on Thursday.
Fed Governor Christopher Waller said Friday that he favors “another significant” rate hike and that it’s “still too early to say that inflation is moving meaningfully and persistently downward.” Fed officials are now in a quiet period until the policy meeting next week.
Investors are betting there’s a 88% chance of a 75-basis-point increase Sept. 21, with just 12% projecting a 50-basis-point rate hike, according the CME FedWatch Tool. Just 43% had anticipated a 75-basis-point increase a month ago.
While gold is a traditional hedge against inflation, the anticipated rate increases in response to it are bearish.
The dollar index held near a one-week low days after reaching a new 20-year high. A weaker dollar makes gold more attractive as an alternate investment.
Front-month silver futures rose 5% last week to settle at $18.77 an ounce on Comex. The December contract gained 1.8% Friday. Silver tumbled 12% last month after slipping 0.8% in July. It retreated 12% in 2021. Silver prices are tied to industrial demand. The December contract is currently up $0.743 (+3.96%) an ounce to $19.510 and the DG spot price is $19.68.
Spot palladium increased 7.5% last week to $2,207.00 an ounce. It advanced 2% Friday. Palladium retreated 3.3% in August after rising 9.9% in July. It dropped 22% in 2021. The currently DG spot price is up $69.40 an ounce to $2,272.00.
Spot platinum gained 5.6% last week to $892.20 an ounce. It slipped 20 cents on Friday. Platinum tumbled 6.1% in August after decreasing 0.3% in July. It fell 9.4% last year. The DG spot price is currently up $17.20 an ounce to $909.10.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.