Gold drifts lower early Monday on a stronger dollar as investors parsed last week’s monetary policy decision by the Federal Reserve alongside the latest inflation report.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, showed that monthly inflation slowed in November, rising 0.1% last month. That may encourage the Fed to add another interest rate cut to 2025. The markets largely priced in two interest rate cuts next year after the Fed’s policy statement last week and 25 basis point interest rate cut. Rate cuts are considered bullish for gold, making the yellow metal a more attractive alternate investment.
Front-month gold futures fell 1.2% last week to settle at $2,645.10 an ounce on Comex, though the most-active February contract rose 1.4% Friday. Bullion is down 1.3% this month after dropping 2.5% in November and rising 3.4% in October. The metal is up 28% in 2024. The February contract is currently down $15.90 (-0.60%) an ounce to $2629.20 and the DG spot price is $2617.70.
Trading volumes are likely to be light this week ahead of the Christmas holiday.
In addition to the PCE report, data on personal income and personal spending also came in weaker than expected. The Fed raised its inflationary outlook in its policy statement last week.
Before rate cuts in September, November and now December, the Fed had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022. The Fed began raising rates during the pandemic to combat surging inflation.
More than 91% of the investors tracked by the CME FedWatch Tool are now betting that the Fed will keep rates unchanged in January. The rest expect another 25 basis point cut.
Front-month silver futures lost 3.5% last week to $29.96 an ounce on Comex, though the most-active March contract gained 1.9% Friday. Silver is down 3.7% this month after falling 5.2% in November and advancing 4.3% in October. It’s up 24% in 2024. The March contract is currently up $0.202 (+0.67%) and ounce to $30.160 and the DG spot price is $29.65.
Spot palladium decreased 3.3% last week to $933.50 an ounce, though it rose 1.3% Friday. Palladium is down 6.2% this month after declining 12% in November and increasing 11% in October. Palladium is down 16% this year. Currently, the DG spot price is up $12.80 to $947.00.
Spot platinum rallied 1% last week to $939.20 an ounce after rising 1% Friday. Platinum is down 1.8% this month after declining 4.2% in November and rising 1.5% in October. Platinum is down 5.8% this year. The DG spot price is currently up $11.90 to $950.30.
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