Gold ticks up early Wednesday, buoyed by a weaker dollar and growing U.S. Federal Reserve rate cut hopes for September following mild inflation data, but coming off recent highs after the White House said it wouldn’t impose tariffs on gold imports.
The weaker dollar after the consumer price index data made gold a more attractive investment, particularly to holders of other currencies. Signs that inflation is rising, however, will put pressure on the Federal Reserve to hold interest rates at higher levels, something that typically weighs on gold. The central bank will have to walk a tightrope, though, amid signs that the labor market is losing some of its resilience.
Separately, U.S. President Donald Trump said in a Truth Social post Monday that gold wouldn’t be tariffed. The yellow metal closed at a record Friday after U.S. Customs and Border Protection had ruled that gold bars from Switzerland were subject to tariffs, shocking the market.
December gold futures slipped 0.2% Tuesday to settle at $3,399.00 an ounce on Comex, and the front-month contract tumbled 2.6% in the first two days of the week. Bullion gained 1.2% in July after slipping 0.2% in June and losing 0.1% in May. It’s up 29% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $8.10 (+0.24%) an ounce to $3407.10 and the DG spot price is $3363.70.
In the consumer price index report for July, out Tuesday, the Labor Department reported that core CPI – which excludes volatile food and energy prices – increased at the fastest pace since January as the cost of services climbed. Monthly core CPI rose 0.3% from June, in line with forecasts, while on a year-on-year basis, it increased 3.1%, slightly more than economists’ estimates of 3%.
Headline CPI gained 0.2% month on month, in line with estimates, and 2.7% year on year, slightly lower than the 2.8% consensus forecast.
The producer price index comes out Thursday.
The Fed has said it closely watches inflation and jobs data when determining monetary policy. Traders have been raising bets on an interest rate cut at Fed policymakers’ next meeting in September.
More than 99% of the investors tracked by the CME FedWatch Tool are now betting that the Fed will cut rates next month. The Fed has held rates unchanged at 4.25% to 4.50% all year, including at policymakers’ most recent meeting at the end of July. 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.
Front-month silver futures increased 0.6% Tuesday to settle at $38.00 an ounce on Comex, and the most-active September contract fell 1.4% in the first two days of the week. Silver rose 1.5% in July after increasing 9.5% in June and adding 0.6% in May. It rose 21% in 2024. The September contract is currently up $0.468 (+1.23%) an ounce to $38.470 and the DG spot price is $38.46.
Spot palladium decreased 1.6% Tuesday to $1,139.50 an ounce but is down just 50 cents so far this week. Palladium climbed 8.8% in July after surging 14% in June and advancing 2.8% in May. Palladium dropped 17% last year. Currently, the DG spot price is down $5.40 an ounce to $1136.00.
Spot platinum rallied 1% Tuesday to $1,349.80 an ounce and is up 0.8% so far this week. It dropped 3.9% in July after climbing 27% in June and rising 8.6% in May. Platinum lost 8.4% in 2024. The DG spot price is currently down $5.60 an ounce to $1342.30.
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