Gold holds just below $2000 as investors wait for key economic reports

As of 4:00 PM EDT, gold futures basis the most active December contract is up $5.80 and fixed at $1992. Gold futures did trade to $1998.60, just $1.40 under the key psychological of $2000 per ounce. On Friday, October 20 gold futures traded to an intraday high of approximately $2008. However, the move was unsustainable with gold closing at $1994.40. Today’s high is the closest gold has traded to that elusive benchmark since.

Gold’s gain of $5.80 was more than respectable in light of dollar strength today. The dollar is currently up 0.26% and fixed at 106.35. Dollar neutrality would have in essence doubled the gain in gold today. Physical gold prices were much more robust today with a net gain of $9.60 taking spot gold to $1980.10. On closer inspection, investors were active buyers bidding up gold by $14.90 and dollar strength reducing the net gain by $5.30, according to the Kitco Gold Index (KGX).

Gold pricing is still being supported by the geopolitical crisis and war in Israel. The ongoing conflict continues to drive investment dollars into safe-haven assets. Possibly one explanation for both gold and the dollar moving higher today.

However, a more complete picture is that investors are waiting for two important economic reports beginning tomorrow. On Thursday at 8:30 AM EDT, the government will release the latest and most recent data on the third quarter GDP. This will be followed on Friday with the latest data on inflation from the BEA (Bureau of Economic Analysis). They will release the PCE (Personal Consumption Expenditure Price Index) for September.

Updated today, the Cleveland Federal Reserve’s “Inflation Nowcasting” predicts that on a month-over-month percent change the PCE will increase by 0.36%, with the core PCE increasing by 0.29%. The Fed’s Center for Inflation Research is also anticipating that on a year-over-year basis, September’s PCE will be at 3.46% with the core PCE at 3.70%.

The reports released tomorrow, and Friday will be critically important to the Federal Reserve’s monetary policy. It will shape whether the Fed will raise rates one more time this year or continue its recent position to pause rate hikes. Most importantly, it will help shape the decisions made by the Federal Reserve as to how long it will maintain the current elevated levels of interest next year.

Wishing you as always good trading,