Gold, Silver Extend Gains On Geopolitical Conflict, Rate Cut Bullishness

 

Gold, Silver Extend Gains On Geopolitical Conflict, Rate Cut Bullishness

(Bullion News Network) – Gold gained again this afternoon, building momentum from its gains at the beginning of the week. The precious metal now sits within $10 of setting yet another all-time high above the $2,685/oz line. Prices dipped marginally on Monday but remain up by more than $70 since last Wednesday, October 9th. With a contentious U.S. election and a pivotal Federal Reserve meeting slated for less than three weeks from now, it should come as no surprise that uncertainty has given tailwinds to safe haven assets like gold and silver. 

Silver followed a similar trend this week, logging consecutive gains on Tuesday and Wednesday. Silver prices are up $.23 on the day and over $1 since October 9th. Silver dipped by over 30 cents on Monday but quickly recovered the next day. Highly correlated price action across gold and silver markets kept the gold-silver ratio relatively unchanged this afternoon at 84.22:1. 

Platinum and palladium prices are also up on the week, with both platinum-group metals logging gains above the key $1,000 resistance line heading into mid-October. $1,000/oz has been a difficult position to maintain, especially for platinum. With the closure of several major platinum-group precious metal mines still looming over market sentiment, the long-term outlook for PGMs is largely dependent on the growth – or deterioration – of demand in the automotive sector. 

After losing ground on Monday, #gold recovered and now sits within $10 of setting a fresh all-time high above $2,685/oz. #Silver also gained nearly $.25 on the day, making progress toward the $32/oz level.

Rate cut expectations and uncertainty continue to drive price momentum.

— Hero Bullion (@HeroBullion) October 16, 2024

Here’s What’s Driving Precious Metal Prices

Three main factors continue to drive bullish momentum for gold and silver markets: 

1. Geopolitical tensions and conflict. 
2. Rate cut bullishness.
3. Political uncertainty in the U.S.

Geopolitical conflict helped drive gold prices to multiple all-time highs in Q2 and Q3 of 2024. Ongoing wars in Gaza and Ukraine gave tailwinds to gold prices throughout the year. Heading into Q4, fears of a larger geopolitical conflict in the Middle East represent a major boon to safe haven assets like gold and silver, both of which tend to thrive in times of war and geopolitical conflict. Heading into the final three months of 2024, expect the resolution of these various conflicts to play a significant role in the appeal of safe haven metals. 

Rate cut speculation was another market-mover for precious metals, particularly gold, this year. Speculation that a rate cut was on the way drove gold to several all-time highs in the first half of the year, and gold prices rocketed to new heights in the lead-up to the FOMC’s surprise 50 bps cut on September 18th. The gold market took a hit at the beginning of October after favorable labor and PCE reports virtually eliminated the possibility of another jumbo rate cut when the Fed meets again in November. Now, markets seem to have fully priced in a more moderate 25 bps interest rate cut from the Fed. Since gold tends to negatively correlate with interest rates, bullishness on the prospects of a fresh rate reduction has driven metal prices even higher. 

The biggest question mark for precious metal markets heading into November is the U.S. presidential election. Vice President Kamala Harris and former President Donald Trump are locked in a virtual dead heat, and the outcome of this race will likely have a wide range of impacts on markets – and the general U.S. economy. Uncertainty surrounding the hotly contested election is likely a bullish signal for precious metals, but expect more extreme price action as we get closer to Election Day on November 5th. 

To make matters even more complicated, the Federal Reserve will next meet on November 7th, just two days after the presidential election. CME Group’s FedWatch currently projects a near-certain 25 basis-point rate cut at this meeting, but this could certainly change as the FOMC receives new economic data. 

Gold and silver prices are up today, and a combination of geopolitical and economic factors suggests that the bull run may just be getting started.