Gold Trades in Tight Range

Gold trades in tight range

Gold trades in a tight range early Wednesday ahead of the U.S. Thanksgiving Day holiday as investors awaited the release of the minutes of the Federal Reserve policy members last meeting early this month for further direction.

The Fed has raised interest rates by 375 basis points this calendar year in an effort to combat 40-year highs in inflation. But if the minutes indicate that most Fed officials are leaning toward slowing the pace of future rate hikes, it may be bullish for gold. High rates are typically bearish for gold because they make the yellow metal less attractive than other assets. 

Front-month gold futures edged up 20 cents Tuesday to settle at $1,754.80 an ounce on Comex. The February contract dropped 0.8% in the first two days of the week. Bullion fell 1.9% in October, its seventh straight month of declines. The metal is down 4% this year. The December contract is currently down $2.6 (-0.15%) an ounce to $1737.30 and the DG spot price is $1739.90.

Trading volume is expected to be light for the rest of the week, with U.S. financial markets closed for Thanksgiving on Thursday and electronic trading halting early Friday. 

The Fed has raised interest rates by 375 basis points this calendar year, with increases of 75 basis points each in June, July, September, and November. Minutes of the November meeting are due at 2 p.m. Washington time. 

Cleveland Fed President Loretta Mester said Tuesday that she doesn’t object to a slowdown in interest rate hikes at the next monetary policy meeting in mid-December. 

“I think we can slow down from the 75 at the next meeting,” she told CNBC. “I don’t have a problem with that, I do think that’s very appropriate.” 

But St. Louis Fed President James Bullard took a more hawkish tone Tuesday in separate remarks in Kentucky, raising his target for the federal funds rate, which is currently at 3.75% to 4%. 

“In the past, I have said 4.75% to 5%,” he said after a speech. “Based on this analysis today, I would say 5% to 5.25%. That’s a minimum level. According to this analysis, that would at least get us in the zone.”

Investors are betting there’s a 75.8% chance Fed policymakers will raise interest rates by 50 basis points in December, compared with 51.8% a month ago. About 24.2% of investors tracked by the CME FedWatch Tool are projecting a 75-basis-point hike, compared with 45.6% a month ago. 

Economic reports on initial jobless claims for last week and consumer sentiment for November also come out Wednesday. Investors will also be closely watching how much consumers are willing to spend amid high inflation during the holiday shopping season which starts Friday.

Front-month silver futures rose 0.8% Tuesday to settle at $21.23 an ounce on Comex. The March contract gained 0.2% in the first two days of the week. Silver advanced 0.4% in October, its second consecutive monthly increase. It’s down 9.1% this year. The December contract is currently up $0.166 (+0.79%) an ounce to $21.215 and the DG spot price is $21.29.

Spot palladium retreated $1.50 Tuesday to $1,884.00 an ounce and dropped 4.5% in the first two days of the week. Palladium declined 15% last month. It’s down 1.6% in 2022. Currently, the DG spot price is up $21.00 an ounce to $1903.50.

Spot platinum increased 0.9% Tuesday to $1,000.00 an ounce and rose 1.1% in the first two days of the week. Platinum gained 7.3% in October. It’s up 2.8% this year. The current DG spot price is down $6.40 an ounce to $990.90.

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