Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rallied 2.4% to close just under $2,045 as yields and the dollar tumbled in the wake of the Fed’s dovish pivot in monetary policy. It was the metal’s biggest session gain since October and highest finish in nearly two weeks.

At the end of its two-day meeting yesterday, the central bank delivered its strongest signals yet that its aggressive rate-hike cycle is over. The updated dot-plot survey revealed 17 of 19 committee members projecting lower interest rates in 2024, with more than half forecasting three rate cuts of 25 basis points.

Fed funds futures traders are now pricing in a 77% likelihood that the first decrease will come in March, up from 42% two days ago.

Benchmark 10-year Treasury plunged to 3.9%, the lowest level since July, on the prospect of the Fed’s pivot. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds for safety.

The dollar tumbled nearly 1% as the Fed’s dovish turn contrasted with ECB and BOJ statements this week that they will keep interest rates higher for longer. A weaker dollar boosts gold and other commodities by making them less expensive in other currencies, stimulating demand overseas.

Gold was also lifted by higher oil prices. US benchmark WTI crude jumped 3% to more than $71.50 after the International Energy Agency lifted its demand forecast for oil next year. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The rally came despite data showing residual momentum in the US economy. Jobless claims slid 19,000 to the lowest level since mid-October last week. Retail sales in November rose 0.3%, beating forecasts.

The other precious metals were also sharply higher, with silver surging 6.4% while platinum added 5% and palladium advanced a whopping 15.4%.

At the Comex close: February gold gained $47.60 to $2,044.90; March silver surged $1,47 to $24.39; January platinum picked up $45.80 to $967.90; and March palladium rocketed $152.20 higher to $1,121.40 an ounce.