Gold ticks up despite Friday morning’s inflation data and remains firmly above $3400 an ounce, headed for a weekly and monthly gain on a soft dollar and continued hopes that the Federal Reserve will cut interest rates next month.
Inflation rose in July, per the personal consumption expenditures price index (PCE), the Federal Reserve’s preferred inflation measure. Core inflation was 2.9% at a seasonally adjusted annual rate, according to a Commerce Department report Friday, up 0.1% from June. While that’s the highest annual rate since February, it’s in line with the consensus forecast. On a monthly basis, the core PCE index increased 0.3%, also in line with expectations. Although increased inflation can have a negative impact on gold, the yellow metal is taking this uptick in stride as the uptick is not seen as enough to impact the expected Fed rate decrease in September.
December gold futures rose 0.8% Thursday to settle at $3,474.30 an ounce on Comex, and the front-month contract rallied 1.6% in the first four days of the week. Bullion is up 3.8% so far this month after gaining 1.2% in July and slipping 0.2% in June. It’s up 32% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $2.30 (+0.07%) an ounce to $3476.60 and the DG spot price is $3426.10.
Gold reached a five-week peak in the previous session on the weaker dollar, which makes dollar-denominated gold more attractive to holders of other currencies.
Investors are closely watching a conflict between U.S. President Donald Trump and Fed Governor Lisa Cook. Trump tried to remove her this week. Presidents can only remove Fed governors with cause, and Trump has cited allegations that Cook committed mortgage fraud. But she has refused to step aside and sued to remain in her position.
The standoff threatened the central bank’s independence at a time when investors are expecting it to begin loosening monetary policy. Trump has been pressuring the Fed for some time to sharply lower interest rates, and removing Cook would allow him to appoint her replacement, who may align more closely with his views.
Nevertheless, more than 87% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates in September. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. The Fed kept interest rates unchanged last month at 4.25% to 4.50%, a rate that it’s held all year.
The Fed’s favorite inflation measure, the personal consumption expenditures price index, is due out Friday with July data. Consumer sentiment data for August also comes out Friday. U.S. second-quarter GDP data came out Thursday and showed growth was even better than initially thought. Separately, U.S. weekly initial jobless claims fell amid low layoffs.
Front-month silver futures gained 1.2% Thursday to settle at $39.70 an ounce on Comex, and the December contract increased 0.4% in the first four days of the week. Silver is up 8.1% this month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently down $0.108 (-0.27%) an ounce to $39.595 and the DG spot price is $39.00.
Spot palladium increased 1.1% Thursday to $1,108.00 an ounce but is down 2.2% so far this week. Palladium is down 8.1% this month after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. Currently, the DG spot price is down $18.90 an ounce to $1094.50.
Spot platinum rose 1% Thursday to $1,367.20 an ounce but is up just 40 cents so far this week. It’s up 5.7% this month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The DG spot price is currently down $10.50 an ounce to $1355.20.
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.
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Original Article: Gold ticks up despite inflation data from Blog – Dillon Gage
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