Metal Prices Recover Weekly Losses On Rate Cut Bets

 

Gold, Silver Recoup Early Week Losses As American Markets Digest New Data

(Bullion News Network) – Precious metals jumped this afternoon, securing a green Friday for gold after a lackluster start to the week. Silver prices climbed by nearly $.50, although the precious metal remains down from its Monday morning price. What’s behind the late-week trend reversal? Traders are digesting data from earlier in the week, including a lukewarm CPI report that suggests the Fed remains on pace for two 25 bps rate cuts by the end of 2024. The Producer Price Index (PPI) released this morning supports a favorable inflation outlook, giving the FOMC one more reason to move forward with two more rate cuts before the end of the year. 

Interest rate speculation has been a double-edged sword for gold and silver bulls since the start of October. Precious metal prices tend to increase during low-rate environments, and September’s surprise 50 bps rate cut from the FOMC rocketed gold past several all-time highs. In the wake of the aggressive rate cut, however, traders bet big on another jumbo cut when the Fed meets next in November. These expectations were quashed by a better-than-expected labor report and cooling inflation numbers in September and early October, though, sending gold and silver prices sliding as traders adjusted their expectations for November’s Fed meeting. 

Wild Fridays are here in gold and silver. The correction appears over and the markets looking at powering to new heights.

Gold ready for $2,700+ prices next weeks? Looking firm, pullbacks are eaten up. pic.twitter.com/w0QonWeWTP

— Peter Spina ⚒ GoldSeek | SilverSeek (@goldseek) October 11, 2024

Prices dropped early this week as investors came to terms with the virtually eliminated possibility of a 50 bps rate cut in November. The rout lasted until Wednesday, when momentum began to shift in favor of precious metal bulls. Interestingly, an unexpected drop in consumer sentiment in response to rising housing costs injected a bit more uncertainty into markets. 

The U.S. stock market soared to end the week, with both the Dow and S&P 500 closing at a record high to kick off Q3’s ‘earnings season.’ Both the stock and precious metals markets are expected to fluctuate in the lead-up to and aftermath of the 2024 presidential election, a contentious race with massive implications for monetary and foreign policy heading into 2025. Adding to the volatility characterizing markets is a wide range of geopolitical stressors, including wars in Gaza and Ukraine and the threat of a blossoming regional conflict amid rising tensions between Israel and Iran. 

Gold will end the week in the green after a rocky start on Monday, while silver still sits down nearly only a few from its Monday price – and down further from where the metal was last Friday. With several key data reports, a contentious U.S. election, and another Fed meeting scheduled less than a month from now, markets are bracing for a volatile few weeks.