Gold, Silver Jump On Sliding USD, Rate Cut Jitters, and Russia-Ukraine Turmoil

 

Gold and Silver Jump On Strong Economic and Geopolitical Signals 

(Bullion News Network) – After logging six consecutive days of losses, gold prices jumped this morning to start the trading week. Gold climbed more than $50 on the day, crossing the $2,600 level and settling at around $2,615 per troy ounce by market close. Today’s price action is the biggest single-day price increase for gold in over one month, and it comes on the heels of a stuttering start to November for the precious metals market. A stellar Wall Street performance and stronger USD in the wake of Donald Trump’s victory in the 2024 U.S. presidential election pushed gold to a several-month low. 

Silver also saw a trend reversal today, snapping a several-day rout to gain nearly $1/oz since markets opened on November 18th. The precious metal crossed over $31.25/oz, benefiting from a strong set of economic and geopolitical indicators to begin the trading week. This price action drove the gold-silver ratio down; the GSR lost .94:1, falling to 83.60:1 as silver gained ground against gold. 

Platinum group metals also saw green this morning. Platinum gained over $33 on the day, returning to November 11th levels after several days of lukewarm performance. Palladium crossed the $1,000 threshold again, jumping $64 as investors nervously eyed an explosive, escalating situation in Ukraine. Palladium group metal markets are especially susceptible to price action revolving around geopolitical tensions in Russia, given that the superpower is the world’s largest annual producer of palladium. 

For only the 11th time in history, gold declined more than 7% from a 3-year high. After similar signals, the precious metals rallied 80% of the time over the subsequent two weeks. #Gold pic.twitter.com/4MljPMGET5

— SentimenTrader (@sentimentrader) November 18, 2024

Precious Metal Prices Jumped Today – Here’s Why.

What’s behind the precious metals market trend reversal? Three factors helped push gold and silver into the green this morning after a string of losses to start November: 

1. The United States Dollar softened.
2. Market confidence in a Federal interest rate cut decreased. 
3. Developments in the Russia-Ukraine war motivated safe haven buying.

The U.S. Dollar retreated this morning, pulling back after a rally against other currencies, including the Japanese Yen. The American currency jumped to record heights after President-Elect Donald Trump, whose tariff-heavy economic policy proposals would likely devastate the value of foreign currencies, secured re-election in the U.S. presidential election on November 5th. Precious metal prices dropped as the strength of the U.S. Dollar increased and the opportunity-cost of investing in non-interest-bearing assets fell. Today’s trend reversal breathed a bit of new life into metal markets, driving up the value of gold, silver, and platinum group metals. 

On Friday, Wall Street’s steady gains slowed as markets digested the possibility that the Federal Reserve will decide against another rate cut when the FOMC meets in December. Federal Reserve Chair Jerome Powell, speaking to a group of business leaders in Dallas last Thursday, said that the Federal Reserve does not need to be “in a hurry” to continue cutting interest rates. Paired with a relatively hot inflation report earlier this month, Powell’s hawkish tone caused markets to reassess the probability that rates will fall once again before the end of 2024. CME Group’s FedWatch now projects a 43.2% chance that the Fed will opt to keep rates the same at its December meeting. This decreased confidence in a Fed rate cut halted Wall Street’s post-election celebration, giving safe haven assets a bit more room to grow as traditional markets calmed. 

Perhaps the biggest geopolitical stressor to impact precious metal markets Monday was an escalation of Russia’s war in Ukraine. President Joe Biden gave Ukraine permission to use U.S. arms to conduct long-range strikes inside of Russia, a controversial decision that provoked an immediate response from Moscow. With long-range missile strikes in Russian territory now a distinct possibility, markets reacted quickly as traders turned to safe haven assets like gold and silver, two investment classes which tend to perform well during periods of conflict and heightened geopolitical tensions. 

As the ongoing Russia-Ukraine war enters a new phase, expect heavy trading action in platinum group precious metals, especially for palladium. Russia is the world’s biggest producer of palladium, and the capability of long-range strikes from Ukraine poses an acute risk to supply chains for the metal, which is a core material used in the production of catalytic converters. 

Together, these three factors drove gold, silver, and platinum group metals to their first major price gains in over a week.