Gold continues its morning climb after a cooler than expected inflation report. The yellow metal had boosted earlier in the trading day amid haven demand from the standoff between state and federal authorities over immigration arrests in California.
Consumer prices rose less than expected in May as significant pressure from raised tariff, per the Bureau of Labor Statistics. The consumer price index increased 0.1% for May, missing the Dow Jones forecast of 0.2%. Gold prices rose as the data strengthened investors’ conviction the Federal Reserve will start cutting interest rates by September.
An overnight curfew was in effect in downtown Los Angeles on Tuesday and California Governor Gavin Newsom argued that President Donald Trump’s move to deploy the military to the nation’s second-largest city to prevent protesters from interfering in immigration arrests was taking the country to the verge of authoritarianism. The anti-deportation demonstrations, meanwhile, spread to other cities.
Prices of the yellow metal rallied even as they came under pressure from an apparent easing of trade tensions between the U.S. and China following talks in London.
August gold futures fell 0.3% Tuesday to settle at $3,343.40 an ounce on Comex, and the front-month contract lost 0.1% in the first two days of the week. Bullion slipped 0.1% last month after increasing 5.4% in April and gaining 11% in March. It’s up 27% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently up $7.70 (+0.23%) an ounce to $3351.10 and the DG spot price is $3333.00.
Protesters in Los Angeles took to the streets for a fifth day on Tuesday as Trump’s use of the National Guard escalated and Newsom asked a court to stop the military from helping federal immigration agents. Gold is a traditional hedge against geopolitical and economic uncertainty.
Separately, the U.S. and China said that they had agreed on a plane to ease trade tensions, a move seen as bearish for gold. Investors have been jittery in recent weeks amid uncertainty around Trump’s trade and tariff policies and their effect on the economy.
Investors were awaiting the release of consumer price index data for May on Wednesday for signals on monetary policy. The Federal Reserve closely watches inflation and the labor market in determining interest rates. The producer price index will come out Thursday, with consumer sentiment data scheduled for release Friday.
Last month, the Fed left interest rates unchanged again at 4.25% to 4.50%. Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in September, not the next two scheduled policy meetings in June and July. Lower interest rates are typically bullish for gold, making the yellow metal a more attractive alternate investment.
The Fed held rates at policymakers’ meetings this year after reducing them three times in 2024. 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. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
Front-month silver futures dropped 0.4% Tuesday to settle at $36.64 an ounce on Comex, though the July contract rose 1.4% in the first two days of the week. Silver added 0.6% in May after dropping 5.2% in April and advancing 9.9% in March. It gained 21% in 2024. The July contract is currently down $.392 (-1.07%) an ounce to $36.250 and the DG spot price is $36.23.
Spot palladium fell 1.7% Tuesday to $1,071.50 an ounce, though it’s up 0.8% so far this week. Palladium advanced 2.8% last month after falling 4.9% in April and rising 7.3% in March. Palladium dropped 17% last year. Currently, the DG spot price is up $4.70 an ounce to $1079.50.
Spot platinum rose 0.6% Tuesday to $1,220.50 an ounce and is up 4.1% so far this week. It surged 8.6% in May after retreating 3.1% in April and increasing 6.7% in March. Platinum lost 8.4% in 2024. The DG spot price is currently up $59.90 to $1280.40.
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