Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold futures jumped another 1.1% to close at a new all-time high above $2,093 as expectations that the Fed will reduce interest rates in 2024 pressured yields and the dollar, boosting alternative stores of value. It was the metal’s third straight rising session.

The dollar shed 0.5% against major rivals, falling to a five-month low as traders speculate that the Fed will begin cutting interest rates before the ECB and other major central banks. The buck is on track to lose 2.5% this year as the odds of a Fed pivot increase.

The Fed fund futures market is now pricing-in a rate cut of at least a quarter point in March with 90% certainty, up from less than 80% a week ago and 21% a month ago. The odds of a half-point cut in March have risen to more than 16%.

Lower interest rates pressure the dollar by making it less attractive to Forex traders seeking higher yield. A weaker dollar, in turn, lifts gold by making it less expensive in other currencies.

Benchmark 10-year Treasury yields fell below 3.8% for the first time since last July on the dovish rate outlook. Falling yields support gold by decreasing the opportunity costs for holding it instead of bonds as a safe-haven asset.

Gold has rallied since the December FOMC meeting showed a majority of members forecasting as many as three rate cuts for 2024. After the meeting, Fed Chair Jerome Powell added to the dovish outlook by essentially declaring the end of the current rate-hike cycle.

The other precious metals were mostly higher, with silver and platinum adding 0.8% and 1.9%, respectively, while palladium dropped 2.7%.

At the Comex close: February gold gained $23.30 to $2,093.10; March silver climbed 25 cents to $24.64; April platinum added $19, to $1,014.609; and March palladium shed $31.70 to $1,157.70 an ounce.