Gold Hits New Highs Following Inflation News
Last week, precious metals secured weekly gains while gold refreshed a new all-time high above $2,635 following Wednesday's rate cut news. This week's calendar of economic events was marked by jobless claims and GDP data set for release on Thursday, while inflation data was scheduled for release this morning.
On Monday, the Dow Jones Industrial Average closed at a record high for the third consecutive session, while the S&P 500 also closed at a record high amid optimism surrounding recent rate cuts. Elsewhere, gold hovered near a record high of $2,637 throughout Monday's trading.
The gold rally gathered more momentum on Tuesday following dovish remarks from Fed officials and escalations in the conflict between Israel and Hezbollah. On the same day, silver jumped by over 4% and passed $32 for the first time in four months.
On Wednesday, the Conference Board reported that the U.S. consumer confidence index slumped below 98.7 in September from an upwardly revised 105.6 in August. This marked the largest decline in consumer confidence in more than three years. Following the news, the Dow snapped its four-session winning streak as the blue-chip average tumbled more than 300 points.
Following the consumer sentiment report and a weaker-than-expected home sales print, the odds of another 0.50% rate cut increased from 50% to 60%, according to the CME FedWatch tool. These developments boosted non-yielding gold to a fresh all-time high of $2,668 before Wednesday's close.
Gold and silver's rally continued amid rate cut speculation, which was affirmed by comments from various Fed officials on Thursday. As a result, silver touched a twelve-year high of $32.66 during afternoon trading on Thursday, while gold reached a new all-time high of $2,684.
Meanwhile, stocks rallied on Thursday as revised second-quarter U.S. GDP growth exceeded Wall Street expectations, and weekly jobless claims fell to the lowest levels in four months. Following the upbeat economic news, the S&P 500 closed at an all-time high of $5,758.92, while the Dow and Nasdaq notched 0.62% and 0.61% respective daily gains.
This morning, the personal consumption expenditures (PCE) price index only rose 0.1% for the month, which was lower than expected. With progress on inflation, the markets remain optimistic about future rate cuts due to a new focus on the softening labor market. Precious metals saw a slight pullback even with the positive inflation news, with gold dipping to $2,659.29 before recovering to $2,673.70 and silver closing down 1.35% for the day to $31.84.