October Precious Metal Market Analysis: Here’s What To Expect This Month

 

Gold Takes Marginal Loss as Other Precious Metals Climb 

(Bullion News Network) – Gold logged a marginal loss today, dropping just a few dollars to hover around $2,660/ozt due to probable profit-taking. Prices for the metal remain elevated compared to this week’s low, which was $2,634.70 on Monday. A combination of geopolitical and economic stressors sent gold rocketing past several all-time highs toward the end of September. A better-than-expected inflation reading from August’s PCE drove prices down to as low as $2,634.70/ozt as traders priced in a decreasing likelihood of a second jumbo 50 bps rate cut from the Federal Reserve. Today’s price action represents a minor sell-off, erasing only some of yesterday’s substantive gains caused by escalating tensions in the Middle East. 

The real story of the day comes from performances in other key precious metal markets, including silver, platinum, and palladium. All three metals will end today in the green. Silver gained nearly half a dollar, ending the day within a few cents of that pivotal $32 line. Platinum and palladium moved nearly in tandem, with each claiming over $20 and securing a bit of momentum over $1,000/ozt. Despite gold’s negligible loss, today’s movements suggest that safe haven purchasing remains strong heading into Q4 of 2024. 

#Silver gained nearly $.40 today, while gold prices dropped to around $2,660/ozt.

Platinum and #palladium moved in tandem, each adding just over $19/ozt and adding some separation from the key $1,000 support.

Safe haven buying continues to motivate metal market movements.

— Hero Bullion (@HeroBullion) October 2, 2024

What’s Driving Precious Metal Prices This Month? 

Several stressors are motivating bullish trends in precious metal markets at the start of October.

First, traders are still pricing in their bets on how the Fed’s aggressive 50 bps rate cut in September will impact inflationary trends. Safe haven assets tend to perform well during periods of high inflation, and some economists have speculated that the FOMC’s surprise 50 point cut will lead to an uptick in American inflation. Both gold and silver dropped last week when inflation numbers from August came in cooler than expected, a conclusion that seems to bolster Fed Chair Powell’s belief that the Fed’s timing was appropriate. 

Second, geopolitical tensions in the Middle East continue to motivate risk mitigation behavior from traders. Precious metals are safe haven assets and often perform well during times of geopolitical uncertainty and conflict. Israel’s ongoing war in Gaza has been an ongoing concern for investors who fear a larger regional conflict. At the end of September, Israel conducted a series of bombing runs on Lebanon-based Islamist military group Hezbollah, an escalation that poses a risk to regional stability. This week, ballistic missile strikes from Iran on Israel further added to the risks of widescale conflict. 

Finally, expect the upcoming U.S. presidential election to play a significant role in precious metal price action for the month of October. Election day is November 5th, and economic policy has taken center stage in the party platforms of Vice President Kamala Harris and former President Donald Trump during a contentious election cycle. Mr. Trump has suggested a universal tariff of 20% on all imported goods, a controversial proposal that some economists say would raise prices for consumers. Critics of the Biden-Harris administration’s economic policy argue that the U.S. consumer price problem would become worse, should Vice President Harris win in November. 

Regardless of the outcome of this election, the impact of the contentious race on precious metal prices should be significant. The results of the 2020 race were rejected by some conservative leaders, and another contested election could increase risk-mitigatory investing from traders, an undeniable boon for precious metals. 

October Precious Metals Market Analysis – Here’s What To Look Out For

The biggest direct cue for metal prices this month will be economic data. Gold and silver bulls are looking for confirmation that another jumbo rate cut is coming when the Federal Reserve meets on November 7th. Expect the U.S. nonfarm payroll and U.S. unemployment rate reports to have an immediate impact on the likelihood of a 50 bps cut. Fed Chair Jerome Powell has emphasized this year that he remains committed to the FOMC’s dual mandate of maximizing employment and minimizing costs. Evidence that job creation continues to stall would give the committee the evidence they need to consider another aggressive rate cut, especially given the August PCE’s assurance that inflationary risk remains relatively low. 

CME Group’s predictive model FedWatch projects a 62.8% chance that the Fed opts for a modest 25 bps cut at their next meeting, which is scheduled for November 7th. A shakeup in U.S. labor markets will likely tip the scale in favor of a more aggressive rate cut, which would give gold and silver prices a bit of momentum heading into that November meeting. 

Geopolitical tensions in the Middle East will also play a role in motivating gold and silver price action in the final quarter of 2024. Israel’s renewed offensive against Hezbollah and the ongoing war in Gaza have added to the appeal of safe haven precious metals throughout 2024. Iran’s missile strikes on Israel this week inject even more uncertainty into the region, and further escalation poses an acute risk to regional stability.

In the event of a more direct regional conflict, expect heavy price action for precious metals as traders pivot toward safe haven assets. Without outside intervention, a ceasefire in Gaza seems unlikely, and escalations in that conflict will likely continue to provide at least some upside to precious metal prices for the remainder of 2024. 

The election will obviously be impactful for both stock and precious metal markets. It remains unclear whether a Harris or a Trump victory would result in higher precious metal prices. For the time being, expect the heaviest price action to come from speculation and uncertainty. The two presidential candidates offer radically different economic visions for the United States, and each platform contains potential inflationary risks. The Federal Reserve’s FOMC will meet just two days after Election Day to set interest rates. Powell emphasized in a press conference after the committee’s September meeting that politics do not play a role in how the FOMC determines its monetary policy. Still, the timing of this meeting just days after a highly contentious presidential election makes its impact on markets even more significant. 

Once again, volatility remains likely in gold, silver, platinum, and palladium markets as these three stressors resolve.