AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

3/1/2024: Gold surges to 2-month high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold surged 2% to close at a two-month high above $2,095 as weak US data reinforced the prospect of a June rate cut, pressuring yields and the dollar while boosting alternative assets. The metal ended the week 2.8% higher for its second straight weekly win.

US manufacturing retreated again in February, with the ISM index dropping to a two-month low of 47.8%, where any reading under 50% signifies contraction. Orders declined and more workers were laid off as manufacturing posted its sixteenth straight month without expansion.

Separately, consumer sentiment declined slightly in February, according to the University of Michigan survey, but remained near a 32-month high as Americans stay optimistic about jobs and inflation. And construction spending unexpectedly fell in January.

Goldman Sachs cut its Q1 GDP forecast by 0.2% to 2.2% after the data. The Atlanta Fed cut it to 2.1% from 3%.

Coming after yesterday’s modest PCE print, which showed annual inflation falling to more than a three-year low in January, the downbeat data increased the likelihood that the Fed will pivot to lower interest rates in Q2. Fed funds futures traders now put the odds of a June rate cut at more than 70%.

Benchmark 10-year Treasury yields dropped to a three-week low on the shifting rate view, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking lower with yields, the dollar dropped 0.2% against major rivals, supporting gold and other commodities priced in it for international trade by making them cheaper in other currencies.

Also helping gold, oil rallied 2% on expectations that OPEC+ will continue their voluntary supply cuts in coming months. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were higher for the day but mixed for the week. Silver added 2.1% for a weekly rise of 0.7%. Platinum added 0.5% but lost 2.4% for the week. Palladium advanced 2.1% today but still retreated 3.6% this week.

At the New York spot close: gold surged $41 to $2,095.70; silver jumped 48 cents to $23.15; platinum picked up $4 to $888; and palladium climbed $19.30 to $952.80 an ounce.