Gold tips up in Monday morning trading ahead of Fed meeting as investors awaited the minutes from the policymakers this week that set the stage for potential interest rate cuts in the year ahead.
The central bank is widely expected to cut rates for the third time this year, but next year’s actions are less certain amid President-elect Donald Trump’s stated plans for tariffs and the possible economic impact of deportations.
Front-month gold futures rose 0.6% last week to settle at $2,675.80 an ounce on Comex, though the most-active February contract slid 1.2% Friday. 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 $0.40 (+0.01%) an ounce to $2676.20 and the DG spot price is $2656.90.
More than 97% of the investors tracked by the CME FedWatch Tool are now betting that the Fed will cut rates by another 25 basis points Wednesday, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged. Interest rate cuts are considered bullish for gold, making the yellow metal a more attractive alternate investment.
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.
In addition to the rate cuts, geopolitical and economic risk have kept prices elevated. This includes some uncertainty over future Trump administration policy on Ukraine and the Middle East as well as tariffs and deportations.
In economic reports this week, some U.S. manufacturing data for December is due out Monday followed by industrial production and retail sales data for November on Tuesday. Data on housing starts comes Wednesday, followed that afternoon by the Fed announcement and Chairman Jerome Powell’s news conference.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, comes out Friday with November data, as does consumer sentiment for December. U.S. consumer price index and producer price index data for November came in in line with economists’ expectations last week, likely keeping the Fed on track to implement its long-expected rate reductions.
Front-month silver futures tumbled 1.8% last week to $31.03 an ounce on Comex, after the most-active March contract declined 1.9% Friday. Silver fell 5.2% in November after advancing 4.3% in October and rallying 7.9% in September. It’s up 29% in 2024. The March contract is currently up $0.067 (+0.22%) an ounce to $31.095 and the DG spot price is $30.63.
Spot palladium decreased 0.6% last week to $965.50 an ounce after tumbling 2.3% Friday. Palladium declined 12% last month after increasing 11% in October and gaining 3.2% in September. Palladium is down 14% this year. The current DG spot price is down $7.70 an ounce to $959.00.
Spot platinum lost 0.4% last week to $929.50 an ounce after retreating 1% Friday. Platinum declined 4.2% in November after rising 1.5% in October and increasing 5.6% in September. Platinum is down 6.8% this year. The DG spot price is currently up $18.70 an ounce to $946.90.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.
