AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

12/20/2024: Gold jumps on softer inflation

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold jumped 1.4% to close near $2,629 as Treasury yields and the dollar retreated after the PCE index showed softer inflation in November, shifting the rate-cut calculus for 2025. Bullion still fell 0.9% for the week. Silver added 2% to finish at $29.66 but suffered a 3.4% weekly loss.

The personal consumption index rose merely 0.1% in November, the least in three months and half of most forecasts, breaking the gradual uptrend in inflation that has bedeviled the Fed since the summer. The so-called core rate, less food and energy, also rose just 0.1%. The PCE is the Fed’s preferred inflation gauge.

Commenting after the Fed’s rate cut earlier this week, Jerome Powell signaled a wait-and-see attitude toward further reductions, citing a rebound in inflation and still-strong job market. As a result, traders began pricing in just two cuts in 2025, with the second coming next December. The dollar and Treasury yields surged on the changed outlook, pressuring the gold price.

But today’s surprisingly soft PCE print shifted the rate view again. Fed fund futures now project another quarter-point cut in March rather than May, and the odds have increased for a third cut by December.

Benchmark 10-year Treasury yields pulled back from a six month high to just above 4.5%, boosting gold by decreasing the opportunity cost for holding it instead of bonds for safety.

The dollar dropped 0.7% against major rivals after hitting a two-year high yesterday, but still rose 0.7% on the week. Gold typically trades inversely with the buck because is denominated in dollars for overseas trade.

Gold’s sizable gains were capped by rekindled risk appetite. All three major US stock indexes jumped 1.5% after the PCE data on the renewed prospect of lower interest rates next year.

Platinum rose 1.4% today but still slipped 0.3% this week. Palladium added 3.1% on the day but lost 1% on the week.

At the New York spot close: gold gained $36.50 to $2,628.70; silver surged 57 cents to $29.66; platinum picked up $12.90 to $934.40; and palladium advanced $28.35 to $925.45 an ounce.

12/19/2024: Gold slides further on rate view

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold fell 1.7% to close near $2,592 as robust US data reinforced the Fed’s decision to slow interest rate cuts in 2025. Almost all of bullion’s drop came late yesterday following the Fed’s hawkish policy statement, which sharply boosted Treasury yields and the dollar. Silver fell 4.3% to finish at $29.09, with most of this loss coming yesterday.

At the end of its two-day policy meeting yesterday, the Fed cut interest rates by a quarter-point, as expected. But it also delivered a hawkish update to its dot-plot forecast, calling for just two quarter-point cuts in 2025, down from four in the September update.

Citing unusually strong US economic data and low unemployment, Fed Chair Jerome Powell said the rate cut was “a close call” and suggested that any future reductions will occur on a wait-and-see basis.

Data released today underscored the Fed’s desire for caution. GDP in Q3 came in even stronger than previously estimated. The economy grew 3.1% from July through September, marking its second consecutive quarter above 3%. Meanwhile, jobless claims fell more than expected last week, signaling resilience in the labor market.

Benchmark 10-year Treasury yields surged to a two-month high near 4.6% over the past two sessions, pressuring gold by increasing the opportunity cost for holding it instead of bonds for safety.

The dollar strengthened for a second day, adding another 0.3% to yesterday’s 1.1% rally on the prospect of fewer rate cuts in 2025. A rising dollar weighs on gold and other commodities by making them pricier overseas.

Platinum and palladium slid 0.7% and 0.5%, respectively.

At the New York spot close: gold fell $44.30 to $2,592.20; silver plunged $1.32 to $29,09; platinum slipped $6.90 to $925.70; and p0alladium shed $4.30 to $915.30 an ounce.

12/18/2024: Gold tumbles after hawkish Fed

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold slipped 0.3% to close under $2,637 ahead of the Fed’s decision on interest rates. The World Spot price then tumbled another $40 to less than $2,595 after the Fed delivered a hawkish statement about future policy decisions. Silver fell 0.3% to close at $30.41 before the Fed, then another 85 cents after, with the World Spot price stabilizing around $29.52 an ounce.

As expected, the Fed delivered a quarter-point rate cut, bringing its benchmark down to $4.25%-4.5%. In the accompanying policy statement, the central bank indicated it would slow the pace of future rate cuts, given recent upticks in inflation and stable unemployment. The uncertain economic impact of the incoming Trump administration, with its potentially inflationary plan of massive tariffs, added to the Fed’s wait-and-see posture.

The Fed’s revised dot-plot of future rates now shows only two cuts penciled in for 2025, fewer than the four reflected in the September dot-plot.

Benchmark 10-year Treasury yields jumped above 4.5% after the Fed meeting, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking with yields, the dollar surged more than 1% against major rivals. A stronger dollar weighs on gold and other commodities by making them more expensive in other currencies, reducing demand overseas.

Gold’s retreat is largely viewed as a temporary consolidation after record-high gains this year. Bullion remains strongly supported by aggressive central bank purchases, extreme geopolitical turmoil in Ukraine and the Middle East, and the general trend toward monetary easing in global central banks.

Platinum and palladium fell 1.5% and 1.4%, respectively.

At the New York spot close; gold slid $7.90 to $2,636.50; silver dropped 16 cents to $30.41; platinum shed $14.40 to $927.10; and palladium lost $13 to $919.60 an ounce.

12/17/2024: Gold slips on retail sales, dollar

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold slipped 0.3% to close under $2,645 as robust US retail sales data lifted the dollar, undercutting alternative stores of value ahead of the Fed’s decision on interest rates. Silver shed 0.4% to finish at $30.57 an ounce.

Retails sales rose 0.7% in November, beating forecasts of 0.5%, as online buying jumped 1.8% and auto sales surged 2.6%. Sales in October were also revised slightly higher by the Commerce Department. Retail sales comprise around one-third of consumer spending, which in turn accounts for roughly 70% of GDP.

Solid momentum in the economy is expected to change the Fed’s forward guidance tomorrow. While a quarter-point cut this month is almost certain, additional cuts in 2025 may come more slowly, as the Fed’s dot-plot forecast of future rate levels is expected to reflect.

The dollar added 0.2% against major rivals on the data and shifting rate outlook, pressuring gold and other commodities by making them pricier in other currencies.

Platinum rose 1.9% while palladium fell 1.1%.

At the New York spot close: gold slipped $7 to $2,644.80; silver dipped 12 cents to $30.57; platinum picked up $17.50 to $938.80; and palladium dropped $10.90 to $942.25 an ounce.

12/16/2024: Gold slips after US services data

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold edged down 0.2% to close under $2,652 as Treasury yields ticked slightly higher on better-than-expected US services data. Silver inched down 0.1% to finish at $30.70 an ounce.

The S&P flash services PMI surged to 58.5 in December, the highest in 38 months, as companies grew bullish about the business-friendly Trump administration. Any reading over 50 indicates expansion and over 55 is exceptional. The services sector constitutes more than 70% of the economy.

But in a signal that manufacturing continues to struggle, the Empire State index of business conditions fell sharply in December after a strong showing in November.

Benchmark 10-year Treasury yields rose slightly to just above 4.4% on the upbeat services data and expectations the Fed will give measured forward guidance on interest rates when it meets this week. While another quarter-point cut is nearly certainty, the central bankers are likely to suggest a wait-and-see approach to further reductions in 2025.

Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

As it has all year, gold remains supported by strong central bank purchases, geopolitical turmoil, and the general trend toward lower interest rates in major economies. These trends are expected to continue in 2025.

Platinum and palladium rose 1.8% and 0.2%, respectively.

At the New York spot close: gold dipped $4.50 to $2,651.40; silver slipped 4 cents to $30.70; platinum picked up $16.20 to $937.50; and palladium added $2, to $955.10 an ounce.

12/13/2024: Gold gains 0.6% for the week

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold slid 1.2% to close under $2,656 as yields and the dollar edged higher, prompting traders to take profts from yesterday’s climb to a five-week high of $2,687.50. Bullion still gained 0.6% for the week on rising expectations for a rate-cut from the Fed this month. Silver lost 1.9% today and 1.7% this week to finish at $30.66 an ounce.

Wholesale inflation rose 0.4% in November, as evident in yesterday's release of the producer price index, pushing the 12-month rate up to 3% from 2.6%. But most of that increase came from the cost of eggs while the cost of services, which had been stubbornly high, eased substantially. With little evidence of further inflation in the pipeline, economists have sharply lowered their estimates for the upcoming PCE index, the Fed’s preferred inflation gauge.

Following a modest CPI release the day before, the PPI print increased the likelihood that the Fed will reduce interest rates by another quarter-point when it meets next week. Fed fund futures now the odds at 97%, up from 78% just one week ago.

But the recent buoyancy of inflation has also led to a damping of rate-cut expectation for 2025. The odds of another cut in January have fallen to just 23%, with most market participants forecasting March as the earliest Fed meeting for the next reduction. Uncertainty about the extent and effect of President-elect Trump’s aggressive tariff proposals are also factors.

Benchmark 10-year Treasury yields and the dollar both edged higher as traders digested the possibility of a slower unwinding of interest rates next year. Higher yields weigh on gold by incrasing the opportunity cost for holding it instead of bonds. A stronger dollar makes gold and other commodities more expensive in other currencies, inhibiting demand overseas.

Platinum dropped 1.4% today and 0.5% this week. Palladium fell 2.7% for the session and 0.7% for the week.

At the New York spot close: gold fell $31.50 to $2,656; silver shed 58 cents to $30.66; platinum slid $13.10 to $923.55; and palladium dropped $26.40 to $956.60 an ounce.

12/11/2024: Gold reclaims $2,700 after CPI

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold gained 1.3% to close near $2,734 after benign CPI data solidified expectations that the Fed will reduce interest rates next week. Silver added 0.6% to finish at $32.56 an ounce.

The consumer price index for November rose 0.3%, matching forecasts and nudging the 12-month inflation rate to 2.7% from 2.6% in October. The so-called core CPI, excluding food and energy costs, also matched forecasts by rising 0.3% for the month. The 12-month core rate remained unchanged at 3.3%.

Notably, the biggest driver of inflation over the past three years—housing—showed signs of weakening, and that’s music to Fed ears. Rents and related measures of home prices climbed just 0.2% in November, the smallest rise since 2021, and the 12-month increase fell to 4.7% from 4.9% in October.

The net-positive CPI print almost guarantees another quarter-point rate cut when the Fed meets next week. Fed fund futures traders put the odds at 96%, up from 89% before the release and 78% one week ago.

Benchmark 10-year Treasury yields edged slightly lower, boosting gold by decreasing the opportunity costs for holding it instead of bonds for safety.

Platinum slid 0.6% while palladium rose 2.9%.

At the New York spot close: gold gained $36.20 to $2,733.80; silver rose 20 cents to $32.56; platinum shed %.80 to $939.50; and palladium rose $28.10 to $1,002.70 an ounce.

12/10/2024: Gold jumps to 2-week high

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold jumped 1.2% to close near $2,698 as instability in the Middle East drove safe-haven inflows ahead of tomorrow’s release of the latest CPI. It was bullion’s highest finish in two weeks. Silver added 0.5% to close at $32.36 an ounce.

Geopolitics continue to be the main driver of the gold market, with investors insuring against the uncertainty of what come next in Syria after the brutal Assad regime was toppled over the weekend. Mohammed al-Bashir, a little-known rebel figure, said today he would lead as the interim government. What this means for the highly combustible Middle East remains to be seen.

Gold is also benefiting from a global easing trend among major central banks. The ECB, Bank of Canada, and Swiss National Bank are all expected to cut interest rates this week. The Fed is nearly certain to cut interest rates next week, with the odds of a quarter-point reduction at 86% according to Fed fund future trading.

Tomorrow’s release of the latest consumer price index should help clarify the Fed’s attitude toward further easing in 2025. While further rate cuts are anticipated, their size and frequency are an open question.

The People’s Bank of China announced looser monetary policies and active stimulus for its beleaguered economy. As the biggest gold consumer in the world, China’s increase in financial stimulus is expected to stoke gold consumption ahead of the Lunar New Year, a traditional season for buying jewelry.

Platinum and palladium slid 0.7% and 1.3%, respectively.

At the New York spot close: gold gained $32.70 to $2,697.60; silver rose 15 cents to $32.36; platinum slid $6.60 to $943.60; and palladium retreat by $12.40 to $976.20 and ounce.

12/9/2024: Gold rallies on Syria, China

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot rallied gained 1% to close at a two-week high near $2,665 as geopolitical turmoil in Syria drove safe-haven inflows despite small upticks in the dollar. A resumption in purchases by China’s central bank also drove bullion prices. Silver jumped 3.3% to finish at $32.22 an ounce.

Syrian rebels seized the capital city of Damascus over the weekend, ending 13 years of civil war and the brutal dictatorship of President Bashar al-Assad, who fled to Russia. But the outcome of this regime change remains uncertain, raising the possibility of deeper instability in the troubled region.

The People’s Bank of China reported that it will resume buying gold bullion for its currency reserves after a six-month hiatus. Record-high gold purchases by China and other central banks were a major driver of gold’s rally to a series of all-time highs over the past 18 months.

Adding to bullion bullishness, Fed fund futures traders project an 86% likelihood of another quarter-point rate reduction from the Fed when it meets next week on monetary policy. Lower rates pressure bond yields and the dollar, lifting alternative stores of value.

The dollar edged up 0.1% against major rivals as traders anticipate the latest CPI data, scheduled for release this week. If inflation comes in higher than forecast the Fed may signal caution about further rate cuts, which would support the buck.

Platinum and palladium rose 1.4% and 2.9%, respectively.

At the New York spot close: gold gained $26.30 to $2,664.90; silver climbed $1,03 to $32.22; platinum picked up $12.60 to $942.60; and palladium advanced $28.30 to $988.60 an ounce.

12/6/2024: Gold gains on jobs, rate view

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold gained 0.5% to close near $2,639 after mixed US payrolls data reinforced expectations that the Fed will cut interest rates this month. Bullion still slid 0.7% for the week, under pressure from a drop in the risk premium associated with geopolitical turmoil in France. Silver added 0.2% to finish at $31.19, posting a 1.6% weekly rise.

US nonfarm payrolls added 227,000 new jobs in November as hiring returned to normal after being depressed by two severe hurricanes in October. However, the unemployment rate ticked up to 4.2% from 4.1% the month before, and the six-month average of fewer than 150,000 new jobs per month is considered inadequate to sustain the economy.

The mixed data increased the odds of a quarter-point rate cut from the Fed this month to around 85%, up from around 72% yesterday, according to Fed fund futures trading. The dovish rate view was reinforced by several Fed speakers today, including Austan Goolsby, Mary Daly, and Beth Hammock, who indicated that rates need to come down from current levels.

Treasure yield and the dollar both edged down immediately after the payroll report, further supporting gold.

But bullion still finished lower for the week as market tensions eased after the no-confidence vote against French PM Michel Barnier prompted his resignation. French President Macron promised a swift replacement, causing the yield gap between French and German government bonds to narrow and the risk premium on gold to fade.

Platinum fell 1% today and 2.2% this week. Palladium slid 0.7% for a weekly loss of 2.3%.

At the New York spot close: gold gained $12 to $2,638.60; silver added 5 cents, to $31.19; platinum shed $9.25 to $927.95; and palladium retreated $6.95 to $963.15 an ounce.