Gold futures recorded their largest single-session gain in about a month following a lower-than-expected inflation print in October. The yellow metal has slumped this month and now gold prices are flirting with the $2,000 mark again. But based on overnight trading, was this a temporary bump for the precious metal?
December gold futures surged $16.30, or 0.8%, to $1,966.50 per ounce on Tuesday on the COMEX division of the New York Mercantile Exchange. This was the best session performance since Oct. 18. Gold is up about 7.5% year-to-date. In overnight trading, gold is trading relatively flat.
Silver, the sister commodity to gold, climbed back above $22 on Tuesday. December silver futures rose $0.74, or 1.86%, to $23.13 per ounce. The white metal pared some of its year-to-date declines of around 4%. In overnight trading, silver prices picked up a penny.
According to the Bureau of Labor Statistics (BLS), the annual inflation rate eased to 3.2% in October, down from 3.7% in September. This was also below the consensus estimate of 3.3%. The consumer price index (CPI) was unchanged month-over-month. Core inflation, which strips the volatile energy and food components, dipped to 4% year-over-year, down from 4.1%. The core CPI edged up 0.2% monthly.
Financial markets soared on the inflation data, with the leading benchmark indexes rallying by about 2%. The performance in the equities arena and the bullish economic data weighed on US Treasurys and the greenback.
The US Treasury market tanked across the board. However, in overnight trading, bond yields are recuperating some of their losses, with T-bills and notes adding as much as three basis points to trade at, near, or above 5%. Long-term Treasurys were flat overnight.
Investors are betting that the Federal Reserve is finished raising interest rates and could begin cutting them as early as June 2024.
Gold is typically sensitive to movements in interest rates because it impacts the opportunity cost of holding non-yielding bullion.
The US dollar weakened on Tuesday but picked up steam in the overnight hours. The US Dollar Index (DXY), a measurement of the buck against a basket of currencies, returned above 104.00. A weaker greenback is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
In other metal markets, December copper futures were unchanged at $3.68 per pound. December platinum futures shed $1.50, or 0.17%, to $891.30 an ounce. December palladium futures dropped $2.60, or 0.25%, to $1,024.00 per ounce.