Gold trades near five-week low after faling early Monday amid an elevated dollar and bond yields as investors awaited the minutes of the Federal Reserve’s July policy meeting for further direction.
A strong dollar and bond yields make gold less attractive to investors than other assets. Investors are waiting for signals on whether the Federal Reserve is planning to pause its series of interest rate hikes to combat inflation. Such a move would be considered bullish for gold. The central bank’s next policy meeting is scheduled for September.
Front-month gold futures fell 1.5% last week to settle at $1,946.60 an ounce on Comex after the December contract lost 0.1% Friday. 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 $9.50 (-0.49%) an ounce to $1937.10 and the DG spot price is $10.10.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to the lowest level since January 2020, according to Reuters. Meanwhile, speculators in Comex gold cut net long positions by 23,755 contracts in the week ended Aug. 8 to 75,582, according to the latest Commitments of Traders report released Friday by the Commodity Futures Trading Commission.
The latest inflation report, the producer price index, released Friday, showed that wholesale prices rose 0.3% last month, slightly higher than the 0.2% consensus estimate by economists. It rose 0.8% year over year, according to the Bureau of Labor Statistics, though the figure excluding food and energy increased 2.7%
The report put a damper on the broader market Friday, a day after the more closely followed consumer price index came in better than expected. Both inflation gauges are closely followed as indicators of whether the Fed’s actions to rein in inflation are working.
Investors are now awaiting the minutes of the last Fed policy meeting due out Wednesday, along with economic reports on U.S. retail sales on Tuesday.
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. Most investors tracked by the tool are betting that it will then hold at that rate at the remaining meetings this year. The central bank has raised rates by 5.25 percentage points since March 2022 in an effort to rein in inflation.
September silver futures dropped 4.1% last week to settle at $22.74 an ounce on Comex after the most-active contract fell 0.3% Friday. 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 September contract is currently down $0.128 (-0.56%) an ounce to $22.615 and the DG spot price is $22.46.
Spot palladium increased 3.2% last week to $1,324.50 an ounce after advancing 0.9% Friday. 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 $476.10 an ounce to $1278.00.
Spot platinum decreased 1.2% last week to $917.90 an ounce, though it rose 0.2% Friday. 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 down $18.40 an ounce to $900.30.
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