Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

AustinNew York spot gold closed above $2,600 for the first time ever, rocketing 1.2% higher to nearly $2,620 an ounce on momentum from the Fed's aggressive pivot toward monetary easing. Adding 1.5% this week, gold bullion has now risen 27% this year, its best since 2010. Silver picked up 0.3% today and 1.6% this week to end at $30.70 an ounce.

Surprising economists if not the futures markets, which had the odds at 65% before the decision, the Fed cut interest rates by a half point on Wednesday, the most in 16 years, as it shifts its attention from lowering inflation to supporting the labor market.

The FOMC forecasts another 50 basis points in cuts by year end, according to its policy statement, but the markets expect more. Fed fund futures put the odds of another half-point cut in November at almost 50/50 and a total of 75 basis points by December.

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.

While gold could correct downward after this record rally, most analysts are forecasting sharply higher prices. Analysts at USB, in a note to clients, are targeting $2,700 by mid-2025. Citi Research puts gold at $3,000 by the end of 2025.

Platinum fell 1.3% today and 2.5% this week. Palladium dropped 1.9% for the session but picked up 0.3% for the week.

At the New York spot close: gold surged $31.90 to $2,619.90; silver added 8 cents, to $31.18; platinum slid $12.50 to $981.90; and palladium retreated $20.50 to $1,078.10 an ounce.