Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.4% to close at $2,040 after dovish comments from a prominent Fed hawk pressured yields and the dollar, lifting alternative stores of value. It was the metal’s fourth winning session and highest finish in six months.

Fed Governor Christopher Waller said today that the central bank is increasingly confident that interest rates are high enough to bring inflation under control. An influential policy hawk, Waller told the American Enterprise Institute that if inflation erodes for a few more months, “we could start lowering the policy rate.”

The Fed fund futures market is now pricing in a 33% chance of a rate cut by March, up from 21% yesterday, and a 65% likelihood by May, up from 53%. By December, traders see a 69% chance of that the Fed will reduce rates by a full 1%, to 4.25%-4.5%.

Deutsche Bank is even more dovish. Projecting a mild US recession in the first half of next year, its economist are forecasting rate cuts of 1.75% in 2024, reducing the benchmark rate below 3.75%.

This week’s release of revised Q3 GDP number and the October PCE Index will help clarify the short-term direction of policy.

Benchmark 10-year Treasury yield fell again after Waller’s dovish pivot, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking lower with yield, the dollar dumped 0.5% against major rivals on the shifting interest rate outlook. A weaker dollar supports gold and other commodities by making them less expensive in other currencies.

The other precious metals were mostly higher, with silver and platinum climbing 1% and 2.9%, respectively, while palladium slipped 0.3%.

At the Comex close: December gold gained $27.60 to $2,040; December silver rose 25 cents to $24.94; January platinum picked up $27 to $950.20; and December palladium shed $3.10 to $1,057.40 an ounce.