Gold ticked up early Wednesday on the first of this week’s jobs report as investors await comments from Federal Reserve Chairman Jerome Powell later today for direction on monetary policy.
November’s jobs numbers missed the mark. Private payrolls growth was less than expected according to ADP’s report. Companies added 146,000 jobs, below the Dow Jones estimate of 163,000.
The U.S. November jobs report comes out at the end of the week and weekly U.S. initial jobless claims on Thursday. The Fed has said it closely watches both inflation and jobs data when determining monetary policy. Anticipated cuts in interest rates would be considered bullish for gold, but a pause or delay would be bearish, making the yellow metal a less attractive asset for investors.
Front-month gold futures rose 0.4% Tuesday to settle at $2,667.90 an ounce on Comex, though the most-active February contract was down 0.5% in the first two days of the week. Bullion dropped 2.5% last month after rising 3.4% in October and gaining 5.2% in September. The metal is up 29% in 2024. The February contract is currently up $6.30 (+0.24%) an ounce to 2674.20 and the DG spot price is $2653.00.
Both Powell and St. Louis Fed President Alberto Musalem are scheduled to speak Wednesday, and their remarks will be closely watched by investors for signals on the direction of monetary policy, particularly in light of the U.S. election results and President-elect Donald Trump’s pledge to impose tariffs when he enters office. The move is seen as potentially worsening inflation, which the high interest rates were designed to avoid.
Fed policymakers voted unanimously at November’s meeting to cut interest rates by 25 basis points to 4.50% to 4.75%. The central bank also cut rates in September. Before those reductions, 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. Interest rates cuts are typically bullish for gold, which becomes a more attractive investment.
Minutes of the last Fed meeting, released last week, indicated that the policymakers were leaning toward another 25 basis point cut before the end of the year. About 74% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by another 25 basis points Dec. 18, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged next month.
The Fed’s favorite inflation measure, the personal consumption expenditures index, came out just before last week’s holiday and showed that inflation rose in line with expectations in October.
Front-month silver futures gained 2% Tuesday to $31.49 an ounce on Comex, and the most-active March contract increased 1.2% in the first two days of the week. Silver fell 5.2% in November after advancing 4.3% in October and rallying 7.9% in September. It’s up 31% in 2024. The March contract is currently up $0.223 (+0.71%) an ounce to $31.715 and the DG spot price is $31.25.
Spot palladium slid 1.1% Tuesday to $987.50 an ounce, and it’s down 0.8% so far this week. Palladium decreased 12% last month after increasing 11% in October and gaining 3.2% in September. Palladium is down 12% this year. The current DG spot price is up $0.80 an ounce to $991.50.
Spot platinum added 1.1% Tuesday to $962.00 an ounce, and it rallied 0.6% in the first two days of the week. Platinum declined 4.2% in November after rising 1.5% in October and increasing 5.6% in September. Platinum is down 3.5% this year. The DG spot price is currently down $13.20 an ounce to $949.20.
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