Gold slips below $4,000 after hot PCE: what a bar costs
In short
- Spot gold slipped below $4,000 an ounce (Asian-session low $3,996.45). At 7:00 am Bulgarian time (3:00 am Eastern) it is $3,998.60 an ounce, down 0.81% in 24 hours.
- September PCE inflation is 3.6% year over year (core 3.1%) and third-quarter GDP is 3.4% against 3.2% expected. CME pricing shows about a 75% chance of a Fed rate hike in December.
- The cheapest 1 oz gold bar at US dealers is $4,032.93, which is $34.33 above the metal price. Silver is $51.21 an ounce.
Gold has slipped below $4,000 an ounce after US inflation came in at 3.6%, with traders pricing in a Fed rate hike in December. On Wednesday we looked at what a bar costs in the US with gold on the edge of $4,000, and yesterday we previewed the PCE data. Now the numbers are out.
What happened
Headline PCE for September is +0.5% on the month and 3.6% on the year (3.4% in August), while core is +0.3% and 3.1%. Inflation was in line with expectations, while third-quarter GDP came in at 3.4% annualized, above the 3.2% expected (TradingKey). The Fed held rates at 3.75-4.00% on Wednesday, with two members wanting a 0.25-point hike. The probability of a December hike is about 74.9%, according to CME data.
Gold had already fallen more than 1% in the previous session and touched $3,996.45 in Asian trading. It is about 1.9% lower than on Tuesday, down from $4,074.60 to $3,998.60 an ounce. Silver is $51.21, down 1.88% in 24 hours and about 5.7% since Tuesday. Higher interest rates usually weigh on gold because it pays no interest, while bonds and deposits do.
What it means for you
The maths: the cheapest 1 oz gold bar at US dealers is $4,032.93 (Gainesville Coins), against a metal price of $3,998.60, a premium of $34.33 or 0.9%. SD Bullion lists a 1 oz bar at $4,052.60 and buys it back at $3,916.05, a gap of $136.55 or 3.4%. A 1% move in gold is about $40.33 on a bar. Since Tuesday the metal is down $76.00 per ounce.
Other sizes: a 100 g bar is $13,029.50 (SD Bullion) against about $12,856 for the metal, a premium of about $174 or 1.4%. A 1 oz American Eagle is $4,073.03 (Gainesville Coins), a premium of about $74 or 1.9%. Compare every dealer on the US gold prices and silver prices pages.
Bottom line
Gold is about $3,999 an ounce and below $4,000 after PCE inflation of 3.6% and GDP of 3.4% strengthened the case for a Fed hike in December. A 1 oz bar costs from $4,032.93 at US dealers, $34.33 above the metal.
Sources: TradingKey (gold and PCE) · TradingKey (US stocks) · ABC News
Gold prices at US dealers live →
For information only. This is not investment advice.
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