Gold Turns Lower As Investors Turn Cautious Ahead Of Fed Meeting

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WASHINGTON (dpa-AFX) - Gold prices edged lower on Monday as investors stayed away from big trades as they turned cautious ahead of the U.S. Federal Reserve's two-day monetary policy meeting.

Front Month Comex Gold for December delivery declined by $25.70 (or 0.61%) to $4,187.20 per troy ounce.

Front Month Comex Silver for December delivery slumped by 64.30 cents (or 1.10%) to $57.779 per troy ounce.

In the U.S., the Federal Reserve's two-day Federal Open Market Committee meeting is set to begin tomorrow after which the team will announce their decision on interest rates.

Last week's labor data from ADP and Challenger indicated a sudden spurt in job losses.

Friday's Personal Consumption Expenditure (PCE) print (a crucial indicator for the Fed to gauge inflation) confirmed some cooling in prices.

Available data have so far revealed a softening in employment numbers along with mixed inflation figures.

U.S. President Donald Trump is reportedly planning to nominate Kevin Hassett as the next Fed Chair. Hassett has long been a proponent of slashing rates.

The Fed has already brought down the rates twice this year, calibrating it to the current 3.75% to 4.00% range.

CME Group FedWatch Tool indicates that investors are currently betting on an 89.6% chance of a 25-basis-point interest rate cut at the end of the meeting.

Analysts are also eyeing the Summary of Economic Projections (dot plot) to be released after the meeting for clues about the rate outlook as well as the Powell's post-meeting remarks. While a dovish tone could jack up the prices of stocks, energy, real estate, utilities, etc, a hawkish tone may take the steam out of the markets.

On the geopolitical front, attempts by the U.S. administration to end the Russia-Ukraine war continue with no significant breakthrough.

Last week, high-level officials from the U.S. and Ukraine talked for three days to comprehend Ukraine's concerns and expectations and iron out the differences in the new draft of the U.S. peace plan.

Ukrainian President Volodymyr Zelenskyy stated that he had a 'substantive phone call' with American officials. However, yesterday Trump stated that Zelenskyy is not ready to accept the U.S.-formulated peace proposal.

An end to the war could reduce a significant deal of uncertainty currently prevailing in the global economy and boost commodity prices.

This year alone, the yellow metal has seen a surge of around 60% this year by November.

Economists predict that in the short-term, a combination of lower interest rates and an obvious 'flight-to-safety' along with continuing central bank purchases could keep the gold prices on the higher side.

The chances of a year-end 'Santa rally ' now hinges on how the Fed signals on Wednesday.

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Crude Oil Drops to Monthly Lows

Trading Economics

Micro 10-Year Yield Futures DEC5

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Micro 10-Year Yield Futures JAN6

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Micro 2-Year Yield Futures DEC5

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Bloomberg Commodity Index Futures DEC5

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Bloomberg Commodity Index Futures MAR6

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WTI crude oil futures fell more than 2% to trade below $59 per barrel on Monday, nearing monthly lows pressured by a firmer dollar and fresh signs of softer fuel demand.

Equity losses and a weaker economic outlook reduced expectations for transport and industrial consumption, weighing on one of oil’s main demand pillars.

At the same time US crude inventories rose by about 0.57 million barrels in the latest EIA report, adding barrels to the market at a moment when demand signals are already soft.

Geopolitical support was limited after Ukraine confirmed there is still no agreement with Moscow, keeping Russian sanctions in place but offering no new catalyst for supply disruption.

Traders also noted that earlier disruptions to Russian and Ukrainian energy assets have not escalated in recent days.

Losses were partly contained by ongoing concern that Russian export restrictions could remain tight.

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Farm Aid May Discourage Selling of Harvested Grains — Market Talk

Dow Jones Newswires

Micro 10-Year Yield Futures DEC5

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Bloomberg Commodity Index Futures MAR6

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The $12 billion aid package coming from the Trump administration is expected to help crop farmers saddled with losses for their acres in 2025 to get over the financial hump heading toward next spring. That may manifest in a rally in CBOT futures prices, says Joel Karlin of Ocean State Research, but only a short one. "This infusion of cash may make U.S. farmers hold off from marketing until and if better pricing opportunities emerge, but eventually that grain will have to come to market," says Karlin. He also quips that the $12 billion could have gone to tighten the price differences between U.S. and South American grain export offerings, as South American exports remain more competitive for export buyers. (kirk.maltais@wsj.com)

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