Gold tips lower early Monday ahead of holiday as investors looked to January and with it both the change in U.S. presidential administrations and an upcoming Federal Reserve decision.
Trading was light ahead of the New Year’s holiday this week and the dollar was relatively flat, offering little direction. Geopolitical tensions kept the yellow metal elevated. Anticipation of President-elect Donald Trump’s planned tariffs and deportations and their potential economic impact could also affect the outlook for gold, which is often used as a hedge against uncertainty. Anticipated interest rate cuts by the Fed could also influence gold’s direction.
Front-month gold futures fell 0.5% last week to settle at $2,631.90 an ounce on Comex, after the most-active February contract dropped 0.8% Friday. Bullion is down 1.8% this month after dropping 2.5% in November and rising 3.4% in October. The metal is up 27% in 2024. The February contract is currently down $11.60 (-0.44%) an ounce to $2620.30 and the DG spot price is $2611.40.
Financial markets around the world will close this week for the New Year’s Day holiday. Institutional traders and others often use the period between Christmas and New Year’s to close their books for the concluding year.
Economic reports are also light this week. Pending home sales data and the S&P Case-Shiller home price index for November are due out Monday and Tuesday, followed by weekly initial jobless claims Thursday and ISM manufacturing data for December on Friday. Next week will bring closely watched U.S. jobs reports and consumer sentiment data as well as the minutes of the Fed’s December meeting.
The minutes may shed more light on the state of the economy and how many interest rate cuts the Fed makes in 2025. The markets have largely priced in two interest rate cuts next year. Before rate cuts in September, November and 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.
Almost 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 1 cent last week to $29.97 an ounce on Comex, though the most-active March contract tumbled 1.4% 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 down $0.318 (-1.06%) an ounce to $29.650 and the DG spot price is $29.18.
Spot palladium decreased 0.5% last week to $929.00 an ounce after declining 0.7% Friday. Palladium is down 6.6% this month after sliding 12% in November and increasing 11% in October. Palladium is down 17% this year. The current DG spot price is down $0.10 an ounce to $926.50.
Spot platinum declined 1.5% last week to $924.70 an ounce after tumbling 1.9% Friday. Platinum is down 3.3% this month after declining 4.2% in November and rising 1.5% in October. Platinum is down 7.3% this year. The DG spot price is currently down $8.70 an ounce to $920.70.
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