Gold dimmed by rising treasury yields in Monday trading, extending Friday’s losses, amid renewed concerns about inflation by Federal Reserve officials that may affect their upcoming decisions about interest rates.
San Franciso Fed President Mary Daly and Governor Adriana Kugler both said Saturday that the central bank must stay on track to meet its 2% inflation target. While significant progress has been made, inflation remains “uncomfortably above our target,” Daly said at an American Economic Association event in San Franciso. Kugler agreed that “our job is not done.”
The comments put the likelihood of additional interest rate cuts anytime soon in doubt. Lower rates are considered bullish for gold, making it a more attractive alternate investment. So keeping rates unchanged is considered bearish. Gold 2024 rally was spurred by the Fed, the economy and global central bank buying cycles.
Investors will be closely watching economic reports this week for additional signals on what the Fed may do next. They include closely watched U.S. jobs reports and consumer sentiment data as well as the minutes of the Fed’s December meeting.
Front-month gold futures rose 0.9% last week to settle at $2,654.70 an ounce on Comex, though the most-active February contract lost 0.5% Friday. Bullion dropped 1.5% in December after losing 2.5% in November and rising 3.4% in October. The metal gained 27% in 2024, its biggest annual gain since 2010. The February contract is currently down $19.10 (-0.72%) an ounce to $2635.60 and the DG spot price is $2628.40.
Most U.S. financial markets will shutter Thursday, for a national day of mourning for former U.S. President Jimmy Carter. The federal holiday for Martin Luther King Jr. Day on Jan. 20 will also close most U.S. markets. It coincides with the inauguration of President-elect Donald Trump.
Trump’s stated plans for tariffs and deportations and their potential economic impact could affect the outlook for gold if implemented, along with the Fed’s next moves.
Over 90% of the investors tracked by the CME FedWatch Tool are now betting that the Fed will keep rates unchanged at the end of this month. The rest expect another 25 basis point cut.
The Fed’s benchmark interest rate is currently at 4.25% to 4.50% after rate cuts in September, November and December. Previously, the central bank had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to combat inflation.
The minutes of the Fed’s December meeting, due out Wednesday, may shed more light on the state of the economy and how many interest rate cuts the central bank is likely to make in 2025.
Front-month silver futures rallied 0.3% last week to $30.07 an ounce on Comex after the most-active March rose 0.6% Friday. Silver dropped 6% in December after falling 5.1% in November and advancing 4.3% in October. It gained 21% in 2024. The March contract is currently up $0.270 (+0.90%) an ounce to $30.335 and the DG spot price is $29.87.
Spot palladium increased 1.2% last week to $940.50 an ounce after gaining 1.4% Friday. Palladium fell 6.7% in December after sliding 12% in November and increasing 11% in October. Palladium dropped 17% last year. Currently, the DG spot price is up $3.50 an ounce to $939.00.
Spot platinum rose 3% last week to $952.60 an ounce after surging 2.8% Friday. Platinum lost 4.6% last month after declining 4.2% in November and rising 1.5% in October. Platinum slid 8.4% in 2024. The DG spot price is currently up $0.10 an ounce to $945.40.
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