Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold surged 1.9% to close at a new all-time high near $3,741, driven by safe-haven demand, expectations for further rate cuts, and a weakening dollar. It was bullion's first finish above $3,700 an ounce. Silver rose 1.3% to end at $43.80.

Following last week's rate cut from the Fed, its first in more than nine months, the markets have been digesting the mixed signals in its accompanying policy statements. On one hand, the central bankers warned about cracks in the labor market, on the other they warned about inflation driven by aggressive tariffs.

After a few days of deliberation, the verdict appears to be in. The markets expect the Fed to support its full-employment mandate at the expense of its price-stability mandate. And that means more rate cuts, which are bullish for gold and silver because they weaken the dollar and boost alternative stores of value.

Fed fund futures traders are pricing in two more quarter-point cuts this year, one each in the FOMC meetings in October and December.

Reversing three sessions of moderate gains, the dollar fell 0.4% against major rivals on the dovish rate outlook. A weaker dollar supports gold and other commodities by making them less expensive in other currencies, boosting demand overseas.

Continued geopolitical turmoil in Gaza and Ukraine is further fueling demand for gold and silver. Russia announced further occupation of Ukraine's Dnipropetrovsk region. At least 37 Palestinians were killed this morning by Israeli attacks, including 30 in Gaza City, while France joined UK, Australia, and Canada in formally recognizing the State of Palestine.

Platinum and palladium rose 1.1% and 3.2%, respectively.

At the New York spot close: gold gained $69.20 to $3,740.70; silver rallied $1.26 to $43.80; platinum picked up $16 to $1,424.85; and palladium climbed $37.20 to $1,193.75 an ounce.