Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

AustinNew York spot gold gained 0.7% to close at $2,588 despite an uptick in Treasury yields and rallying equities as investors digested yesterday's jumbo rate cut from the Fed. Silver climbed 2.5% to finish at $31.09 an ounce.

The Fed launched its first easing cycle in four years with an oversized half-point cut in its benchmark rate, effectively declaring victory over inflation. The FOMC forecasts another 50 basis points in cuts by year end. Fed fund futures markets, which put the odds of the jumbo cut at 65% before the meeting, anticipate closer to 75 basis points in reductions by December.

The Fed's dovish pivot is widely seen as bullish for gold, putting downward pressure on Treasury yields and the dollar while boosting alternative stores of value.

Following the rate cut, Citi Research forecast gold at $2,600 by the end of 2024 and $3,000 by the end of 2025. Analysts at USB, in a note to clients today, are targeting $2,700 by mid-2025.

Wall Street rallied sharply as falling interest rates stoked appetite for risk. The Dow and S&P; 500 surged 1.5% and 1.9%, respectively, while tech-heavy Nasdaq jumped 2.8%. Often heavily reliant on research and development, tech firms are extra-sensitive to interest rates because their earnings are projected far into the future, requiring them to capitalize via borrowing.

Reinforcing investor confidence, the Philly Fed manufacturing gauge rose from contraction to expansion in September. In addition, first-time jobless claims fell 12,000 to 219,000 last week, the lowest level since May.

Capping gold's gains, benchmark 10-year Treasury yields rose near 3.75% as traders shifted from safe-havens to risk assets. Higher yields pressure gold by increasing the opportunity cost for holding it instead of bonds.

Platinum and palladium advanced 2% and 3%, respectively.

At the New York spot close: gold gained $17.30 to $2,588; silver rose 75 cents to $31.09; platinum picked up $19.60 to $994.40; and palladium climbed $32.10 to $1,098.60 an ounce.