Gold boosts on China Central bank purchases and strengthening expectations for an interest rate cut at the Federal Reserve’s meeting next week. China resumed gold purchases after a six-month pause.
The yellow metal posted its second consecutive weekly drop last week, though it rebounded from some of the losses after a report Friday showed U.S. job growth surged in November. The positive jobs report also sent the S&P 500 Index soaring to a new record. The Federal Reserve has said it closely watches both inflation and jobs data when determining monetary policy.
Wednesday will bring consumer price index data from the Bureau of Labor Statistics, followed Thursday by the producer price index.
Front-month gold futures fell 0.8% last week to settle at $2,659.60 an ounce on Comex, though the most-active February contract rose 0.4% Friday. Bullion dropped 2.5% last month after rising 3.4% in October and gaining 5.2% in September. The metal is up 28% in 2024. The February contract is currently up $32.40 (+1.22%) an ounce to $2692.00 and the DG spot price is $2674.10.
Also keeping a floor under gold prices was geopolitical risk including the toppling of Syrian President Bashar al-Assad over the weekend.
Last week’s jobs data supports additional Fed interest rate cuts next week and into 2025. Rate reductions would be considered bullish for gold, but a pause or delay would be bearish, making the yellow metal a less attractive asset for investors.
The U.S. added 227,000 jobs in November, according to data released Friday by the Labor Department, beating economists expectations for 200,000. The figures indicated that some people who had been temporarily unemployed because of hurricane effects and labor strikes returned to the workplace.
About 85% of the investors tracked by the CME FedWatch Tool are now 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 this month.
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.
Front-month silver futures rose 1.5% last week to $31.59 an ounce on Comex after the most-active March contract increased 0.2% Friday. 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 $0.411 (+1.24%) an ounce to $33.510 and the DG spot price is $32.14.
Spot palladium slid 2.4% last week to $971.50 an ounce, and it declined 0.5% Friday. Palladium decreased 12% last month after increasing 11% in October and gaining 3.2% in September. Palladium is down 13% this year. The current DG spot price is up $33.40 an ounce to $1002.00.
Spot platinum lost 2.4% last week to $933.40 an ounce, and it slid 0.8% Friday. Platinum declined 4.2% in November after rising 1.5% in October and increasing 5.6% in September. Platinum is down 6.4% this year. The DG spot price is currently up $28.10 an ounce to $960.20.
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