Gold and silver slipped from fresh 2-week highs in London on Monday as a firmer US Dollar and steadier crude oil checked the retreat in bets on near-term Fed rate hikes. On the same day, Citi joined London Precious Metals Clearing Limited, expanding the infrastructure behind the world's main bullion market.
Gold and silver both fell from new 2-week highs in London trading on Monday as the US Dollar rallied and crude oil steadied above pre-Iran war levels. That move stalled the retreat in market expectations that the Federal Reserve will soon start raising interest rates to counter inflation.
Rate bets hold near a three-week low
Market consensus for where the Fed funds rate will end 2026 rose 1 basis point to 3.93%, still close to the lowest level since 16 June and above the central bank's own forecast of 3.8%. That projection was itself revised up from a previous 3.4%. This Wednesday brings the minutes from the Fed's mid-June decision to keep rates on hold at 3.63%.
New Fed chairman Kevin Warsh spoke last week at the central banking forum in Sintra, Portugal. According to BullionVault: "Inflation risks have declined over the past four weeks," he said.
Inflation gauges point lower
The Cleveland Fed's model-based measure of 1-year expected inflation fell from May's 3.5% spike to 3.0% in June, drawing on inflation swaps, Treasury yields and survey data. May's official CPI reading of 4.2% set a 4-year high for US inflation, with June's estimate due out on Tuesday next week.
Spot gold topped $4,200 per troy ounce for the first time since 22 June before losing $50 from that peak. London silver, which finds nearly 60% of end-use demand from tech and other productive applications, topped $63 this morning before falling back below $62.
Citi joins London clearing ranks
US financial group Citi is joining London Precious Metals Clearing Limited alongside ICBC Standard, J.P.Morgan, HSBC and UBS. The current 4 members of LPMCL cleared almost $90 billion per day of gold and silver trading between them on behalf of London bullion market participants in May.
The not-for-profit body called the move a major expansion of Citi's precious metals business, one first mooted in the media back in October.
Source: BullionVault
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