In a notable turn of events on Monday (August 28), gold futures demonstrated an upward trend, supported by a frailty in the dollar and a drop in US Treasury yields. All eyes are on the upcoming US inflation and labor data releases this week, as investors seek cues to evaluate the potential direction of interest rates set by the Federal Reserve (Fed).
The value of gold futures experienced an uptick of $6.90, corresponding to a 0.36% increase, ultimately settling at $1,946.80 per ounce. Similarly, silver futures edged up by 1.8 cents, marking a 0.07% rise, to conclude at $24.252 per ounce. Platinum futures experienced a more substantial climb, surging by $24, equating to a 2.53% increase, and concluding at $972.20 per ounce. Palladium futures mirrored this upward trajectory by rising $27.20, indicating a 2.2% gain, and ultimately closing at $1,256.30 per ounce.
As the trading day unfolded, the dollar index, representing its performance against a basket of six major currencies, exhibited a modest decline of 0.02%, resting at 104.0567. Simultaneously, the yield on the 10-year US Treasury dropped to 4.218% during the overnight period.
A weakening dollar effectively renders gold contracts, which are priced in US dollars, more expensive for investors using other currencies. In addition, the decrease in US Treasury yields contributes to lowering the expense associated with holding onto gold. This is particularly pertinent since gold, as an asset, doesn’t yield interest.
Market participants remain vigilant as they anticipate key economic data releases from the United States throughout the week. Of significance are the upcoming job openings and labor turnover (JOLTS) figures for July, as well as the August consumer confidence index from the Conference Board, both set to be unveiled today.
Moving forward to Wednesday, the market’s attention will shift to August’s private payroll figures from ADP, the second estimate of the 2nd quarter 2023 gross domestic product (GDP), and July’s pending home contract sales.
On Thursday, the focus will be on the release of the weekly jobless claims figures, alongside the personal consumption expenditure (PCE) price index for July. Moreover, the manufacturing index for August, issued by the US Institute for Supply Management (ISM), will also be under close scrutiny.
In the coming days, market dynamics are poised to be significantly influenced by these key indicators, with investors hoping to glean insights into the potential trajectory of the Fed’s interest rate policies. As the interplay between the dollar, bond yields, and precious metals continues to unfold, the markets remain poised for potential volatility and strategic shifts.
The Spot Market is Open
Tuesday, August 29, 2023