Precious Metals Move Sideways on Election, Fed Meeting Jitters

 

Gold, Silver Move Sideways on Election and Fed Meeting Jitters

(Bullion News Network) – Gold and silver prices moved very little today to open the week, with gold gaining just over a $1 and silver adding $.06 to its spot price. Both precious metals will end the day relatively on par with Friday’s closing price, which saw gold and silver markets dip after a historic midweek run. The gold-to-silver ratio was virtually unchanged from last Friday and is set to end the day at about 84.13:1.

Platinum and palladium prices retreated to start the week; platinum itself dipped below $1,000/oz, and palladium dipped over $16.50 on Monday. Today’s price action extended last week’s losses for platinum group metals. Palladium is down nearly $100/oz since reaching a local high last Tuesday. Movement in the platinum market has correlated closely with palladium’s price action; platinum hit a local high on October 29th before falling over $50 in nearly a week.

Market jitters are likely behind the lackluster start to the week, according to analysts. Tomorrow, Americans will hit the voting booths to decide the winner of a presidential election pollsters say is still virtually tied. Expect metal prices to fluctuate over the next week as votes are counted and a winner is declared. 

#Gold and #silver moved sideways this morning on election and rate cut jitters. Americans will hit the voting booths tomorrow to decide the next President of the United States, and the FOMC’s Nov. 7th meeting also has some traders holding their bets for the next cue.

— Hero Bullion (@HeroBullion) November 4, 2024

What Will the Election Mean For Precious Metals? 

U.S. elections often directly impact precious metals. In the short term, experts anticipate volatility in both traditional and precious metal markets. Investors who are unsure of the outcome of the election will seek to hedge their bets as results come in from various swing states, resulting in potentially extreme price adjustments throughout the entire vote counting process. 

The stakes of this U.S. election are high, especially for the precious metals market. Gold and silver are popularly considered safe haven assets, and both are used by some investors as a hedge against inflation, geopolitical instability, and economic uncertainty. In the medium to long term, expect markets to react strongly to the final results of the 2024 presidential election – regardless of which candidate winds up on top. 

Throughout the year, economic uncertainty and geopolitical stressors have driven gold and silver prices to record heights. Of particular interest to traders has been a set of ongoing wars in Ukraine, Gaza, and several stress points in the Middle East. Israel has ramped up pressure against Palestine-based Hamas, Lebanon-based Hezbollah, and Iran. In Ukraine, North Korea’s aid to Russia pushed gold higher and secured a historic run for palladium as traders fretted over the possibility that a reaction from South Korea could escalate into a regional conflict. 

Clearly, the winner of the 2024 presidential election will inherit a laundry list of geopolitical obstacles to navigate. Even before Inauguration Day, gold and silver investors using the precious metals to hedge against uncertainty will weigh in on their faith in the new U.S. President’s capability to effectively negotiate a tumultuous geopolitical environment. 

Investors Look Forward to Another Fed Rate Cut – Here’s What to Expect

The prospects of another cut to the federal interest rate is also helping tether gold and silver prices as markets brace for a week of action. The Federal Reserve will meet on Thursday for the first time since the surprise 50 basis point rate cut that drove gold to an all-time high in September. This time, analysts anticipate a more moderate 25 bps cut as Powell attempts to stick a soft economic landing to round out 2024. 

CME Group’s FedWatch only projects a .3% chance that the Fed will opt to keep rates the same and a 99.7% chance of a 25 bps cut. Most experts believe that the FOMC will decide to cut rates by 50 total basis points by the end of the year – 25 points in November and 25 more points in December. 

The impact of the Fed’s next move on metal markets might be even more pronounced than usual, given the timing of the November FOMC meeting. The Fed will meet just two days after Election Day in the United States, and its decision will add even more fuel to what is likely to be a chaotic week for the markets. 

With both a hotly contested U.S. election and a highly anticipated Fed rate cut coming later this week, this appears to be the calm before the storm for precious metal markets.