Gold slips early Monday on trader profit taking, after prices of the metal soared to a three-week peak last week.
Investors awaited key economic reports for direction during the short holiday week. The most important will be the Federal Reserve’s favorite inflation measure, the personal consumption expenditures index for October, coming out Wednesday. Also closely watched will be Tuesday’s release of consumer confidence data for November and the minutes of the November meeting by Federal Reserve policymakers.
Prices are likely to be volatile this week with many U.S. traders out of the market for the Thanksgiving holiday long weekend.
Front-month gold futures rose 6.5% last week to settle at $2,737.20 an ounce on Comex, after the most-active contract – which rolled to February from December last week – rallied 1.4% Friday. Bullion is down 0.4% this month after rising 3.4% in October and gaining 5.2% in September. The metal is up 32% in 2024. The February contract is currently down $72.30 (-2.64%) an ounce to $2664.90 and the DG spot price is $2640.10.
Traders in the yellow metal are watching the economic data and political headlines for signals on the Fed’s next moves on monetary policy and the potential impact to the economy from President Donald Trump’s plans for increased tariffs and tax cuts, which could trigger a resurgence of inflation.
Friday, consumer sentiment data from the University of Michigan showed a smaller-than-forecast increase for November, with views diverging sharply among Republicans and Democrats about the economy after the election.
The Fed has been widely expected to continue interest rate cuts into 2025 as inflation has slowed to near target levels, but Trump’s tariff and tax plans have the potential to change the inflationary picture and those plans.
Just over half of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by another 25 basis points in December, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged next month. But the percentage of those expecting the Fed to keep rates unchanged has increased in the past week.
A halt or delay in interest rates would be bearish for gold, which typically gets a boost from lower interest rates. The Fed cut interest rates by a total of 75 basis points in September and November to 4.50% to 4.75%. Before the Fed’s recent cuts, 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. The Fed began raising rates during the pandemic to combat surging inflation.
In addition to the inflation and consumer confidence data, new home sales data for October, third-quarter GDP and weekly initial jobless claims figures are due out this week.
The latest developments in the Russia-Ukraine conflict are likely to affect prices as well. The situation has escalated in the last week or so, with the authorization of Ukraine’s use of American missiles to strike limited targets inside Russia and increased saber rattling by Russia.
Front-month silver futures gained 4.4% last week to $31.78 an ounce on Comex, as the most-active contract, which rolled to March from December last week, increased 1.3% Friday. Silver is down 3.1% this month after advancing 4.3% in October and rallying 7.9% in September. It’s up 32% in 2024. The March contract is currently down $0.956 (-3.01%) an ounce to $30.820 and the DG spot price is $30.39.
Spot palladium increased 6.3% last week to $1,026.50 an ounce, though it fell 2.5% Friday. Palladium is down 8.8% this month after increasing 11% in October and gaining 3.2% in September. Palladium is down 8.1% this year. Currently, the DG spot price is down $27.30 an ounce to $1002.00.
Spot platinum gained 2.7% last week to $973.40 an ounce after edging up 0.2% Friday. Platinum is down 2.5% this month after rising 1.5% in October and increasing 5.6% in September. Platinum is down 2.4% this year. The DG spot price is currently down $17.80 an ounce to $957.30.
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