Gold hits new record early Monday, ahead of a series of speeches by Federal Reserve policymakers that may shine additional light on monetary policy and the state of the economy, days after the central bank announced its first interest rate cut in nine months.
Investors are also awaiting the Fed’s favorite inflation report, the personal consumption expenditures price index, due out at the end of the week, for further direction. Last week, the Fed cut rates by 25 basis points to 4.00% to 4.25%, because of a weaker job market, even though inflation has been getting worse.
Gold extendeded its rally, hitting a record $3,728 per troy ounce on Monday. The yellow metal has grown doubled in value since late 2022. Demand is expected to remain robust for some time due to a mix of factors. Central bank purchases are helping fuel the drive. Annual net purchases of gold by central banks have exceeded 1,000 metric tons each year since 2022, according to Metals Focus, which expects them to buy 900 tons this year – twice the annual average of 457 tons in 2016-2021.
Most investors are now anticipating another two rate cuts are before the end of the year. Typically, lower interest rates are bullish for gold, making it a more attractive alternate investment.
December gold futures rose 0.5% last week to settle at $3,705.80 an ounce on Comex, after the front-month contract climbed 0.8% Friday. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 40% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $48.70 (+1.31%) an ounce to $3754.50 and the DG spot price is $3721.60.
Fed Chair Jerome Powell is scheduled to speak Tuesday on the economic outlook and may provide additional guidance about the timeline of future interest rate cuts. Despite expectations of a series of reductions, he seemed to push back against speculation of rapid rate cuts in his comments last week.
Almost 90% 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.
Five different Fed officials are scheduled to deliver remarks Monday, with more on the calendar for later in the week. In addition to the inflation report on Friday, U.S. second-quarter GDP is due out Thursday, along with durable goods orders and weekly initial jobless claims.
Front-month silver futures gained 0.3% last week to settle at $42.95 an ounce on Comex. The metal surged 2% Friday. Silver rallied 11% last month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently up $0.903 (+2.10%) an ounce to $43.855 and the DG spot price is $43.61.
Spot palladium fell 4.5% last week to $1,157.00 an ounce after decreasing 1.3% Friday. Palladium declined 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. Currently, the DG spot price is up $39.90 an ounce to $1182.50.
Spot platinum gained 0.4% last week to $1,413.90 an ounce after rising 1.1% Friday. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The DG spot price is currently down $9.10 an ounce to $1407.50.
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.