Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

AustinRising for a sixth straight session, New York spot gold added another 0.3% to close above $2,659 as traders bet the Fed will deliver another jumbo rate cut to support the flagging job market. Bullion has now risen 29% so far this year. Silver fell 1.3% to end at $31.70 an ounce.

When the Fed delivered its first half-point rate cut in 16 years last week, Chairman Powell told reporters that his focus is pivoting from inflation to jobs. The size of the cut indicated the urgency of the pivot, and for good reason.

The labor market, while not exactly redlining, has weakened dramatically. Monthly job creation has fallen to the lowest level since 2019, excluding the pandemic. Job opening have plunged 37% since early 2022. The unemployment rate has jumped from 3.4% to 4.2% in 18 months. And the number of Americans on unemployment has risen to pre-pandemic levels.

The markets increasingly expect the central bank to ride to the rescue by delivering another oversized rate cut in November. Fed fund futures trading is pricing in odds of half-point reduction at 59%, up from 37% a week ago.

Falling interest rates are bullish for gold because they pressure bond yields, decreasing the opportunity cos for holding gold as a safe-haven asset. And lower rates typically weaken the dollar, making gold less expensive in other currencies.

Gold's gains today came despite a rebound in the dollar, which picked up 0.4% as the yuan weakened on concerns that China's easing program, announced yesterday, may be inadequate to lifting its ailing economy.

Platinum picked up 0.4% while palladium slid 2%.

At the New York spot close: gold gained $8 to $2,659.20; silver slipped 41 cents to $31.70; platinum added $4, to $991.70; and palladium shed $21.70 to $1,038.40 an ounce.