Gold hits new high, climbing to almost $3900 an ounce early Wednesday, boosted by haven investors after the U.S. government shut down.
A spending vote failed late Tuesday in a deadlocked Senate, sending the government careening to a halt as funding ran out at the start of October, the beginning of the federal government’s fiscal year. A shutdown was set to furlough about 750,000 federal employees a day, while others would have to work without being paid, the nonpartisan Congressional Budget Office estimated Tuesday. It put the amount of compensation going on hold at about $400 million a day.
Gold is a traditional hedge against economic and geopolitical uncertainty, such as the shutdown, so it was bullish for the yellow metal. Estimates that the Federal Reserve will cut interest rates again this month also boosted prices. Lower interest rates are typically bullish for gold, making the precious metal a more attractive alternate investment.
December gold futures rose 0.9% Tuesday to settle at $3,873.20 an ounce on Comex, and the front-month contract gained 1.7% in the first two days of the week. Bullion surged 10% in September, the most in six months, after adding 5% in August and gaining 1.2% in July. It’s up 47% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $25.7 (+0.66%) an ounce to $3898.90 and the DG Spot price is $3871.70.
U.S. consumer confidence fell to a five-month low in September amid a worsening outlook for the economy and more specifically the job market, according to data released Tuesday from the Conference Board. That may bolster the case for the Fed to cut interest rates again at its next meeting.
Investors are awaiting direction from key monthly jobs reports, including the private payrolls report from ADP on Wednesday and the key monthly U.S. employment report for September on Friday.
The Fed’s favorite inflation report, the personal consumption expenditures price index, came out Friday and showed that so-called core inflation – which excludes volatile food and energy prices, held at 2.9% year on year in August, while the figure was also unchanged at 0.2% month on month. The Fed has said it’s balancing inflation, which is above the central bank’s target, with a worsening job market as it sets monetary policy.
The Fed cut interest rates for the first time in nine months in September, lowering them by 25 basis points to 4.00% to 4.25%.
Almost 100% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with the rest expecting the central bank to hold rates unchanged. 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.
Front-month silver futures fell 0.8% Tuesday to settle at $46.64 an ounce on Comex. Silver rose 15% last month, the biggest monthly rally in two and a half years, after climbing 11% in August and gaining 1.5% in July. It rose 21% in 2024. The December contract is currently up $1.140 (+2.44%) an ounce to $47.780 and the DG spot price is $47.75.
Spot palladium lost 0.6% Tuesday to $1,264.00 an ounce and decreased 1.9% so far this week. Palladium rose 14% in September after declining 7.8% in August and climbing 8.8% in July. Palladium dropped 17% last year. The current DG spot price is down $6.40 an ounce to $1263.00.
Spot platinum slid 2.2% Tuesday to $1,567.90 an ounce and lost 0.7% in the first two days of the week. It increased 15% in September after rising 5.9% in August and dropping 3.9% in July. Platinum lost 8.4% in 2024. The DG spot price is currently down $8.80 an ounce to $1570.90.
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.