Gold had a fourth straight monthly gain in May, and its supporters think it will gain again in the coming days, particularly during the first trading week of June. This is trading off the back of the final inflation report for May, which was released on Friday and left us none the wiser about the course of price pressures, Fed interest rates, and bond yields.
The so-called PCE spending, income, and inflation data didn’t surprise on the prices side (it did on consumer spending, which was weaker).
The key core reading of PCE inflation for last month showed little change. Certainly, there was nothing to clarify the uncertainty of the timing of a Fed rate cut this year.
So, US Comex gold futures were down 0.8% for the day at $US2,347.70 at the close and up half a percent for the week, and 1.6% for the month. But it ended $US107 an ounce under its all-time high reached in early May of $US2,454 an ounce (the Memorial Day holiday Monday).
The monthly gain was due to “the central bank (buying) element and the residual geopolitical risk story,” Kyle Rodda, a financial market analyst at Capital.com, told Reuters.
The downgrading of France’s credit rating by S&P Global had no impact on gold prices (decades ago France used to be a mythical big influence in gold). S&P Global cut France’s rating from AA to AA-, but with a stable outlook.
The rating cut means S&P has ignored the French government’s efforts to put its public finances back in order by cutting spending and controlling costs. The ratings agency said it saw rising deficits and continuing political fragmentation.
(Ratings agencies are going to have fun with America’s rating later this year if the convicted felon, Donald Trump, manages to regain the Presidency. Only Moody’s has a AAA, but the outlook is negative. S&P is AA+ negative, Fitch is AA+ stable.)
Friday sees May jobs data for the US, which will be the next big test for gold, along with the rate decision Thursday by the European Central Bank.
Front-month Comex silver ended at $US30.55 per ounce, up half a percent on the day, 3.1% for the week, and a very tasty 14% for the month, its biggest monthly gain since the depths of the pandemic in July 2020.
Copper cooled though, the Comex front month ending the week and month at $US4.63 a pound, down 2.7% for the week but up 1.3% for the month. It was up 12% at one stage in mid-May.
The metal is now down more than 55 cents from its May all-time peak of $US5.19 a pound. That’s a drop of more than 10% and a better indication of how quickly the copper story has cooled.
Helping douse the copper boomlet was the failure of BHP’s bid for Anglo American (for the time being). That saw a lot of other fanciful tales about copper ‘deals’ and price records vanish.
Iron ore, meanwhile, ended the week with another small drop to just over $US115 a tonne, from $US120.81 a tonne a week earlier. That fall came after China said it would be putting a lid on steel-making capacity this year to cut coal consumption and carbon emissions.
Portside stocks were steady at 148.6 million tonnes last week at the 45 major ports in China.