Gold steady after the Fed rate cut announcement on Wednesday and post-election volatility as Donald Trump prepared to return to the White House. The yellow metal dipped in early morning trading, but the bulls have since brought it back near the $2700 an ounce threshhold.
The U.S. central bank reduced its benchmark federal funds rate by 25 basis points to 4.50% to 4.75%, in line with economists’ expectations. Lower interest rates are typically considered bullish for gold.
The yellow metal tumbled Wednesday after former U.S. President Donald Trump was reelected and Republicans gained control of the U.S. Senate. The results from Tuesday’s election buoyed both the dollar and Treasury yields, depressing gold as an alternate investment.
Front-month gold futures rose 1.1% Thursday to settle at $2,705.80 an ounce on Comex, and the most-active December contract slid 1.6% so far this week. Bullion rose 3.4% in October after gaining 5.2% in September and advancing 2.2% in August. The metal is up 31% in 2024. The December spot price is currently up $1.8 (+0.07%) an ounce to $2707.60 and the DG spot price is $2699.80.
Gold-backed exchange-traded funds showed inflows for the sixth straight month in October, supported by North America and Asia, according to the World Gold Council.
The Fed’s decision was the second rate cut in a row after a 50 basis point reduction in September. The Fed had previously kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
“Recent indicators suggest that economic activity has continued to expand at a solid pace,” Fed policymakers said in a statement after their meeting. “Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the committee’s 2 percent objective but remains somewhat elevated.”
The statement indicates that the central bank is placing renewed emphasis on labor market conditions.
More than 70% of investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates by another 25 basis points in December, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged.
With the contest for the White House resolved, Trump made his first key appointment Thursday, naming the co-manager of his campaign, Susie Wiles, as his incoming White House chief of staff.
Front-month silver futures rose 1.7% Thursday to $31.86 an ounce on Comex, and the December contract decreased 2.5% in the first four days of the week. Silver advanced 4.3% in October after rallying 7.9% in September and gaining 0.7% in August. It’s up 32% in 2024. The December contract is currently up $0.035 (+0.11%) an ounce to $31.890 and the DG spot price is $31.87.
Spot palladium dropped 1.8% Thursday to $1,031.50 an ounce, and it’s down 7.8% so far this week. Palladium increased 11% in October after gaining 3.2% in September and rising 3.2% in August. Palladium is down 7.7% this year. Currently, the DG spot price is down $9.70 an ounce to $1020.50.
Spot platinum gained 0.4% Thursday to $997.70 an ounce and is down 0.2% so far this week. Platinum rose 1.5% in October after increasing 5.6% in September and sliding 5.2% in August. Platinum is little changed this year. The DG spot price is currently down $5.70 an ounce to $991.40.
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