Investors are also awaiting the Fed’s favorite inflation report, the personal consumption expenditures price index, due out at the end of the week, for further direction. Last week, the Fed cut rates by 25 basis points to 4.00% to 4.25%, because of a weaker job market, even though inflation has been getting worse.
Gold extendeded its rally, hitting a record $3,728 per troy ounce on Monday. The yellow metal has grown doubled in value since late 2022. Demand is expected to remain robust for some time due to a mix of factors. Central bank purchases are helping fuel the drive. Annual net purchases of gold by central banks have exceeded 1,000 metric tons each year since 2022, according to Metals Focus, which expects them to buy 900 tons this year – twice the annual average of 457 tons in 2016-2021.
Most investors are now anticipating another two rate cuts are before the end of the year. Typically, lower interest rates are bullish for gold, making it a more attractive alternate investment.
December gold futures rose 0.5% last week to settle at $3,705.80 an ounce on Comex, after the front-month contract climbed 0.8% Friday. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 40% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $48.70 (+1.31%) an ounce to $3754.50 and the DG spot price is $3721.60.
Fed Chair Jerome Powell is scheduled to speak Tuesday on the economic outlook and may provide additional guidance about the timeline of future interest rate cuts. Despite expectations of a series of reductions, he seemed to push back against speculation of rapid rate cuts in his comments last week.
Almost 90% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with the rest expecting the central bank to hold rates unchanged. 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.
Five different Fed officials are scheduled to deliver remarks Monday, with more on the calendar for later in the week. In addition to the inflation report on Friday, U.S. second-quarter GDP is due out Thursday, along with durable goods orders and weekly initial jobless claims.
Front-month silver futures gained 0.3% last week to settle at $42.95 an ounce on Comex. The metal surged 2% Friday. Silver rallied 11% last month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently up $0.903 (+2.10%) an ounce to $43.855 and the spot price is $43.61.
Spot palladium fell 4.5% last week to $1,157.00 an ounce after decreasing 1.3% Friday. Palladium declined 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. Currently, the spot price is up $39.90 an ounce to $1182.50.
Spot platinum gained 0.4% last week to $1,413.90 an ounce after rising 1.1% Friday. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The spot price is currently down $9.10 an ounce to $1407.50.
