Premium Discounts! Buy Switzerland Gold at Only 0.30% Over Spot.
Gold Gains Amid Rate Cut Optimism and Geopolitical Upheaval
Share:
Last week, gold dipped as stronger U.S. employment data dented the odds of aggressive interest rate cuts. This week, investors closely monitored talking points from Federal Reserve officials and U.S. economic data for hints as to the Fed’s next move on the interest rate front.
On Monday, U.S. markets were gripped by uncertainty stemming from conflict in the Middle East, a tumultuous election, and concerns over Hurricane Milton's fallout. As a result, stocks dipped as the Dow Jones Industrial Average shed 500 points. Gold and silver started the week near $2,643 and $32.04, respectively. The pair encountered some downward pressure on Monday resulting in modest declines, as the dollar index touched a seven-week high.
Stocks bounced on Tuesday, as a tech rally propped up major averages. Meanwhile, gold notched its 5th straight daily decline as last week’s stronger-than-expected employment data weighed on rate cut optimism. By the end of Tuesday’s trading, gold had fallen by 1% to a closing price of $2,617.
On Wednesday, the dollar index neared a two-month high of 102.93, making gold more expensive for foreign currency holders. While dollar strength pressured gold to the downside, losses for bullion were limited by Middle East woes. As a result, gold was modestly lower by Wednesday’s close, at $2,614.
Elsewhere, the S&P 500 and Dow Jones Industrial Average touched record highs following the release of minutes from the Fed's September meeting. The meeting notes revealed a “split” between more cautious Fed officials who favored a 0.25% rate cut next month and others who were in support of a more aggressive, 0.50% rate cut.
On Thursday, investors were taken aback by downbeat economic data in higher-than-expected inflation and unemployment numbers. Jobless claims reported by the Labor Department reached their highest level since August of 2023, at 258,000. On the same day, it was revealed that core CPI, which is a measure of consumer inflation, rose by 0.3% for the second month in a row when analysts forecasted a smaller number of 0.2%.
While stocks tumbled following the economic news, gold snapped its six-session losing streak. The yellow metal was aided, as the disappointing jobless claims print increased the odds of a more aggressive November rate cut. While gold managed a 1% gain, the yellow metal’s upside was capped by dollar strength. As a result, gold ended Thursday’s trading at $2,645 while silver ended the day modestly higher at $31.32.
Gold rose more than 1% this morning, following news that producer inflation was unchanged in September. The encouraging inflation news coupled with continued geopolitical concerns supported gold and silver’s upward trajectory. As this is written, gold is 0.5% higher for the week at $2,658. Despite today’s uptick, silver failed to overcome losses from earlier this week. As a result, the gray metal faces a 1.5% weekly loss at $31.55 an ounce.
This morning, Wall Street investors were encouraged by promising third-quarter earnings data from major banks such as Wells Fargo and JPMorgan Chase. By today’s close, the S&P 500 and Dow had reached record highs on their way to 1.3% and 1.4% respective weekly upticks. Meanwhile, the tech-heavy Nasdaq Composite secured a 1.6% weekly gain.
