Gold climbs from three-week low early Wednesday as investors awaited the afternoon’s monetary policy announcement from the Federal Reserve and a summit between the U.S. and Chinese leaders. The yellow metal regained nearly 2% with spot gold rising back above $4000 an ounce.
The central bank is widely expected to cut interest rates again Wednesday. Economists will be closely watching the Fed policymakers’ statement and comments by Chair Jerome Powell for indications on future moves. Rate cuts are typically bullish for gold, making it a more attractive alternate investment. But haven demand for the precious metal is easing as the U.S. and China appeared to edge closer to a trade agreement.
In addition to the Fed and trade talks, gold has retreated from last week’s record highs as investors took profits.
December gold futures fell 1.3% Tuesday to settle at $3,968.70 an ounce on Comex, and the front-month contract lost 4.1% in the first two days of the week. Bullion is up 2.5% this month after surging 10% in September, the most in six months, and adding 5% in August. It’s up 50% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $38.20 (+0.96%) an ounce to $4021.30 and the DG spot price is $4009.30.
Almost 98% of all the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. The Fed lowered interest rates by 25 basis points in September to 4.00% to 4.25%.
New inflation data from the September consumer price index, which came out Friday, reinforced expectations of a cut. It showed that inflation grew less last month than economists had forecast. The figure is the only official economic data allowed to be released during the government shutdown and was only published because the data is used to calculate cost-of-living adjustments for Social Security benefit checks. The Fed closely watches inflation and labor market data when setting monetary policy.
U.S. President Donald Trump and Chinese President Xi Jinping are set to meet this week at the APEC summit in South Korea. Trump said Wednesday that the U.S. would be willing to lower tariffs on China if the country helps crack down on the export of chemicals used to make fentanyl.
The U.S. government shutdown, now in its 29th day, is also supporting gold, a traditional hedge against economic uncertainty.
Front-month silver futures rose 1.2% Tuesday to settle at $47.32 an ounce on Comex, though the December contract declined 2.6% in the first two days of the week. Silver is up 1.5% this month after rising 15% in September, the biggest monthly rally in two and a half years, and climbing 11% in August. It rose 21% in 2024. The December contract is currently up $0.731 (+1.54%) an ounce to $48.055 and the DG spot price is $48.15.
Spot palladium fell 0.3% Tuesday to $1,413.00 an ounce and is down 2.9% so far this week. Palladium is up 12% this month after rising 14% in September and declining 7.8% in August. Palladium dropped 17% last year. Currently, the DG spot price is up $26.50 an ounce to $1425.00.
Spot platinum increased 0.2% Tuesday to $1,601.40 an ounce but is down 1% so far this week. It’s up 2.1% this month after gaining 15% in September and rising 5.9% in August. Platinum lost 8.4% in 2024. The DG spot price is currently up $24.50 an ounce to $1617.30.
Disclaimer: This editorial has been prepared by Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or a recommendation regarding any particular security, commodity, or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities, or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand, and accept this disclaimer.