The gold price has defied expectations of rate cuts in the US.
As it gained nearly 1% Friday, the precious metal ignored US inflation figures that were hotter than expected and instead focused on a softer report on the labor market.
The US CPI Index showed an increase of 2.4% in September, compared to 2.5% in August.
The reading was slightly higher than the 2,3% economists expected.
The CPI, excluding energy and food, increased 3.3% in the past year, compared to 3.2% last August. This was also higher than economists’ expectations of 3.2%.
The Federal Reserve’s upcoming meeting is expected to reduce interest rates by only a small percentage due to the hotter inflation figures in the US.
Gold prices rise on data about jobless claims
Data released on Thursday showed that the number of Americans filing for unemployment benefits increased to 258,000 from the previous 225,000.
Analysts’ expectations were 230,000.
The Fed is assessing the labor market before making decisions about interest rates. This has led to a decline in gold prices.
CME Fedwatch revealed that traders had priced in an 81% probability of a 25 basis-point cut in November.
Carsten Fritsch is a commodity analyst with Commerzbank AG. He said:
It is surprising that the price increase has been so strong, given the fact that the expectations for interest rate reductions in the US are now significantly lower than they were after the unexpectedly positive US labour market data last week.
Mary Daly, the president of the Federal Reserve Bank of San Francisco, said that she expected the Fed to cut interest rates by one or two before the end of this year.
She said the US inflation rate was not as important to her as the US labor market.
The December gold contract at COMEX is currently 0.9% higher, or $2,662.90 an ounce.
Silver and Palladium Prices Rise
Silver futures on COMEX, and palladium contracts on the New York Mercantile Exchange both rose after the dollar dropped sharply against other currencies.
The dollar’s weakness makes goods priced in greenbacks cheaper for holders of currencies other than the greenback, which increases demand.
Silver, an industrial metal as well, has risen in price, just before China’s Finance Ministry is scheduled to hold a Saturday press conference to discuss further economic stimulus.
China is the largest consumer of base and precious metals in the entire world. Demand for commodities is likely to increase if China continues to support its economy.
The December silver contract at COMEX, which was the most actively traded, closed the day at $31.435 an ounce. This is up 0.6% compared to the previous close.
NYMEX palladium was trading at $1,081.28 an ounce. This is a 0.9% increase from the previous closing. Prices have increased in the past two sessions, as the market attempts to recover from August’s lows.
Experts believe that further price increases will be limited, as the demand for metals is likely to remain low due to the proliferation of battery-electric vehicles.
This post Gold buoyed on by US weak labor market; Silver and Palladium Rises on Weaker Dollar may be updated as new information becomes available
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