Silver investment moves slightly lower this week as markets anticipate the Federal Reserve’s decision this afternoon, impacting both silver and gold bullion. Ahead of Chairman Jerome Powell’s statement on the economy, early Wednesday shows a rise in gold prices due to weaker bond yields.
The consensus expects the central bank to maintain interest rates at the current level of 5.25% to 5.50% until May. Recent reports on inflation and job numbers reflect market resilience, with November’s consumer price index data indicating a slowdown in inflation while remaining significantly above the Fed’s 2% target. On Wednesday, the producer price index data for November is set to be released, further influencing market sentiment.
In Comex trading, gold futures for the front-month lost 50 cents on Tuesday, settling at $1,993.20 per ounce. The February contract reflects a 1.1% decrease over the first two days of this week. Despite a 3.2% rise in November following October’s 6.9% gain and a 5.1% dip in September, gold has shown an overall increase of 9.1% in 2023. Currently, the February contract sits at $1997.50 per ounce, while PGS’s spot price stands at $1984.00.
The core Consumer Price Index (CPI), excluding volatile food and energy prices, revealed a 0.3% increase in November from the previous month and a 4% rise year-on-year, as per Tuesday’s Labor Department release. When including food and energy prices, the increase was 0.1% for the month and 3.1% annually. These figures, mostly in line with estimates but slightly worse, impact the market outlook.
Fed officials closely monitor inflation and labor market reports to inform monetary policy decisions. Typically, higher interest rates negatively affect gold’s attractiveness compared to assets like bonds. Any indication of a rate pause or cut is likely to bolster gold’s position among investors.
The CME FedWatch Tool indicates a 98.2% probability of the Fed maintaining its federal funds rate on Wednesday, with only 1.8% expecting a 25 basis point increase. The consensus predicts unchanged rates in January and March, but the majority foresee a rate cut in May. Since March 2022, the central bank has raised rates by 5.25 percentage points to rein in inflation towards the 2% target.
Additionally, this week will see announcements on monetary policy decisions from the European Central Bank and Bank of England.
As for silver, front-month futures slipped 0.2% on Tuesday, settling at $23.02 per ounce on Comex. The March contract is down 1.1% this week, marking a 12% increase in November, a 2.2% rise in October, and a 9.5% fall in September. Overall, silver has declined by 4.3% in 2023. Presently, the March contract is valued at $22.905 per ounce, while PGS’s spot price stands at $22.61.
For inquiries about silver and gold investment, visit www.ploutosgs.com or contact us at 617-564-1630. Stay updated by following us on Facebook: https://www.facebook.com/Ploutosgoldandsilver/.
