Breaking Gold Market News (16 July 2024) | Gold Hits Fresh All-Time High Amid Political Controversy, Rate Cut Bets

 

Breaking Gold Market News (16 July 2024) | Gold Hits Fresh All-Time High Amid Political Controversy, Renewed Rate Cut Bets

Gold prices broke yet another record this morning, gaining over $40 to set a new all-time high above $2,465/oz. On 20 May of this year, gold reached its highest price ever at $2,450.05 per troy ounce. Less than two months later, gold has once again reached new heights. Experts point to three main factors behind gold’s newest all-time high: 

1. Renewed interest rate cut bets from the Federal Reserve. 
2. The attempted assassination of former President Donald Trump. 
3. Bullishness on the prospects of another Trump Presidency. 

In a rare convergence of economic and political stressors, gold is currently sitting nearly $20 above its last all-time high and may have more room to grow. 

Renewed Interest Rate Bets Propel Gold Toward All-Time High

Last week, the Consumer Price Index (CPI) released by the Bureau of Labor Statistics showed that inflation numbers were better-than-expected for the month of June. Markets reacted, and gold prices jumped on news of the report. Federal Reserve minutes from its June meeting became public on 3 July and reaffirmed the Fed’s commitment to cutting interest rates once the FOMC has evidence that inflation is moving sustainably toward the longstanding 2% target. 

Read the Federal Reserve’s full June meeting minutes.

Favorable inflation data from the June CPI suggests that the Economy is approaching the FOMC inflation goal, which revived bets that one or more interest rate cuts may be coming in the next few months. Interest rate cut speculation has played a major role in gold price-action this year, so the optimistic June CPI contributed to a significant run for the gold market. 

In an interview yesterday (15 July), Federal Reserve Chair Jerome Powell confirmed that last week’s CPI “add[s] somewhat” to the FOMC’s confidence that the economy is moving sustainably toward that 2% inflation target. Although he gave little guidance on where interest rates are heading, the economist emphasized that labor markets are approaching “better balance.” 

Former President Trump Assassination Attempt May Play a Role in Gold Price-Action

Adding to gold’s lingering are the lingering questions surrounding the 13 July assassination attempt on former President Donald Trump at his political rally in Butler, Pennsylvania. An assailant fired a shot at the former President as he spoke to a crowd of supporters, striking his right ear before the politician was rushed off the stage by Secret Service. Controversy surrounding the violent attack may be one reason behind gold’s new record high. 

#Gold hit a fresh All-Time High (ATH) as hopes for Fed rate cuts grow, and some traders ramped up bets on a second Donald Trump presidency. (BBG) pic.twitter.com/dFCBqPx3ew

— Holger Zschaepitz (@Schuldensuehner) July 16, 2024

Because of its status as a safe haven asset, demand for gold tends to spike during periods of political uncertainty. The attempt on the life of former President Trump is a major stressor and could motivate more investor appetite for historically safe assets like gold, silver, and platinum. Gold moved little yesterday as the market closely watched Jerome Powell’s interview for signals on where rate cuts may be heading. Now, it seems like the effects of Saturday’s political violence are now being priced into the market. 

Heightened appetite for safe haven gold bullion helped drive the metal to a fresh all-time high this morning. 

Gold Prices Climb on Heightened Odds of a Second Trump Presidency 

The electoral impact of the attempted assassination of former President Trump is still unclear. The assassination attempt occurred only two days before the Republican National Convention (RNC), which finalized Mr. Trump’s nomination for President of the United States yesterday (15 July). The attempt on the life of former President Trump may boost his odds of winning the Presidency, according to Harry Dempsey of the Financial Times: 

The metal climbed further following the weekend’s assassination attempt on Trump, which boosted his odds of a second presidency.

Heightened odds of another Trump victory have also contributed to rising gold prices. A second term for former President Trump continues may boost the long-term appeal of gold. Former President Trump’s promises to cut taxes and his tendency to inflame economic relations with China would likely fuel increased investor appetite for safe haven assets. 

Several economic and political stressors combined this week to drive gold to a new all-time high. As of now, the metal sits just above $2,465 per ounce.