Gold eyes weekly rise early Friday in light holiday trading volumes as investors continued to mull the outlook for monetary policy following last week’s Federal Reserve interest rate cut while watching rising tensions in the Middle East. However, the bullion is getting pressure from rising Treasury yields.
The yield on the benchmark 10-year Treasury climbed 3 basis points higher at 4.607%. That’s down from its peak earlier in the week but back above the 4.6% level that it had not broke through since May. The 2-year Treasury was tipped up 4.334%.
U.S. weekly initial jobless claims came out Thursday and showed that recurring applications for unemployment benefits rose to the highest level in more than three years, an indicator that it’s taking longer for out-of-work Americans to find jobs.
The Fed has said it closely watches both the labor market and inflation when setting monetary policy. The central bank cut rates last week for the third time this year. Rate cuts are considered bullish for gold, making the yellow metal a more attractive alternate investment.
Front-month gold futures rose 0.7% Thursday to settle at $2,653.90 an ounce on Comex, and the most-active February contract is up 0.3% so far this week. Bullion is down 1% 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 down $23.70 (-0.89%) an ounce to 2630.20 and the DG spot price is $2614.00.
Trading volumes are light this week and expected to be light next week around the Christmas and New Year’s holidays. Institutional traders and others often use this time at the end of the year to close their books.
Continuing applications for unemployment benefits rose 1.91 million in the week ended Dec. 14, while new applications for unemployment benefits dropped by 1,000 to a seasonally adjusted 219,000, the Labor Department reported Thursday. The four-week moving average increased 1,000 from the previous week to 226,500.
The figures were the latest indicator that unemployed people are having a harder time finding work. Last week, Fed Chairman Jerome Powell said the labor market is “in solid shape” though policymakers are keeping an eye on it.
The state of the labor market may determine how many interest rate cuts the Fed makes in 2025. The markets have largely priced in two interest rate cuts next year since last week’s policy statement. 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 89% 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 added 0.4% Thursday to $30.39 an ounce on Comex, and the most-active March contract is up 1.4% so far this week. Silver is down 2.3% this month after falling 5.2% in November and advancing 4.3% in October. It’s up 26% in 2024. The March contract is currently down $0.359 (-1.18%) an ounce to $30.030 and the DG spot price is $29.50.
Spot palladium decreased 2.6% Thursday to $935.50 an ounce, though it’s up 0.2% so far this week. Palladium is down 6% this month after declining 12% in November and increasing 11% in October. Palladium is down 16% this year. The current DG spot price is down $10.30 an ounce to $925.00.
Spot platinum declined 1% Thursday to $942.50 an ounce and is up 0.4% this week. Platinum is down 1.5% this month after declining 4.2% in November and rising 1.5% in October. Platinum is down 5.5% this year. The DG spot price is currently down $13.60 an ounce to $930.50.
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