AGE Daily Gold Update

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

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.