Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

AustinExtending last week's 1.5% rally, New York spot gold added another 0.3% to close at a fresh record above $2,628 on momentum from the Fed's oversized rate cut, along with safe-haven inflows from escalating Middle East violence. Silver fell 1.3% to finish at $30.77 an ounce.

Pivoting from reducing inflation to supporting the labor market, the Fed cut interest rates by 50 basis points last week as it embarks on an aggressive pivot toward monetary easing. Fed fund futures put the odds of another half-point cut in November at almost 50/50 and project a total of 75 basis points in further cuts by December.

Several Fed officials voiced support of the size of the rate cut today. Both Chicago Fed President Austan Goolsbee and Atlanta Fed President Raphael Bostic said a half-point cut was warranted because inflation is down and the job market is cooling, yet the funds rate was far more restrictive than needed.

Lower interest rates are bullish for gold because they put downward pressure on Treasury yields, decreasing the opportunity cost for holding it instead of bonds for safety. And low rates weaken the dollar, making gold cheaper overseas.

Further supporting gold Israel and Hezbollah stepped up attacks on each other, threatening to escalate their conflict into a full-scale war.

Platinum and palladium fell 2% and 3.1%, respectively.

At the New York spot close: gold gained $8.40 to $2,628.30; silver slid 41 cents to $30.77; platinum shed $20.10 to $961.80; and palladium dropped $33 to $1,045.10 an ounce.