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Gold Breaches $2,700 for the First Time as Tailwinds Mount
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Last week, gold notched a 0.5% uptick amid continued safe haven buying and optimism surrounding monetary policy easing. This week, markets were again driven by speculation over interest rate cuts, geopolitical tensions, and election uncertainty in the U.S.
While bond markets were closed on Monday in observance of Columbus Day, the New York Stock Exchange was open. U.S. equities saw broad gains on Monday, as a risk-on mood dominated Wall Street sentiment. Most notably, the Dow Jones Industrial Average and S&P 500 closed at record highs, as tech shares boosted major averages.
Meanwhile, gold and silver ended Monday’s trading slightly lower at $2,645 and $31.14 respectively, as the dollar index neared a two-month high of 103.29. On Tuesday, the Dow dipped by 300 points as disappointing tech earnings pressured major averages to the downside. On the same day, gold pared its losses from the previous session, as Treasury yields retreated. Meanwhile, investors awaited economic data for cues regarding the Fed’s next move.
Following Tuesday’s tech-led selloff, stocks rallied on Wednesday. Most notably, the Dow notched its 38th record close of 2024. Elsewhere, gold neared a record high of $2,681 as the 10-year Treasury yield dipped to a one-week low.
On Thursday, news broke that TSMC, the world's largest chipmaker, reported a 54% quarterly profit, which was aided by increasing demand for chips used in artificial intelligence. This news, coupled with strong U.S. retail sales data, bolstered stocks, as major averages hovered near respective all-time highs.
Gold also rallied on Thursday, as news surfaced that the European Central Bank cut interest rates for the third time this year, citing economic woes. Additionally, gold encountered tailwinds in Middle East tensions, along with election uncertainty in the U.S. As a result, the yellow metal ended Thursday's trading at an all-time high of $2,710, while silver neared $32 an ounce.
U.S. stocks extended their gains on Friday as Netflix shares surged, ahead of next week’s tech earnings. Of the three major averages, the Dow saw the most significant weekly uptick, at 0.9%, while the S&P 500 and Nasdaq secured 0.8% and 0.7% weekly gains.
This morning, it was reported that Hezbollah will pursue retaliatory strikes against Israel, which increased tensions in the Middle East. As a result, gold surged another 1% this morning and would end the week 2.3% higher at a fresh record high of $2,721 an ounce. Aided by the gold rally, silver also jumped this morning, and would end the week 7.4% higher, at $33.72.
