AGE Daily Gold Update

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

3/21/2024: Gold rallies on rate view relief

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rallied 1.1% to close near $2,185 despite upbeat US economic data on follow-through from yesterday’s Fed forecast of three rate cuts in 2024 and dovish post-meeting comments from Fed Chair Jerome Powell. Silver slipped 0.3% to $24.85 an ounce.

Following its two-day meeting on monetary policy yesterday, the Fed updated its quarterly dot-plot forecast to show it still intends to cut interest rates three times this year, just as it did last December. The cuts would drop the median benchmark rate to 4.6% from its current 5.25% to 5.5%.

The markets were surprised and relieved that the Fed stuck to its rate-cutting plan despite recent evidence of stickier core inflation, strength in the labor market, and stronger-than-expected GDP growth.

In his post-meeting press conference, Jerome Powell dismissed concerns that low unemployment may stoke inflation and change the outlook for interest rates. “Strong job growth is not a reason for us to be concerned about inflation,” Powell asserted, and would not be “a reason to hold-off interest rate reductions.”

Fed fund futures now put the odds of a quarter-point cut in June at 73%, up from around 50% earlier in the week.

Benchmark 10-year Treasury yields fell after Powell’s comments and extended that slide today, dropping to 4.27%. Lower yields boost gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Gold’s gains came despite a stronger dollar, which added 0.5% against major rivals after the Swiss National Bank unexpectedly cut interest rates, becoming the first major central bank to do so. The Bank of England held rates unchanged but signaled that falling inflation may open the door for lower rates in the UK.

Some upbeat US data also helped the buck. The Philly Fed factory gauge stayed slightly in expansion for a second month. The Conference Board's index of leading indicators rose 0.1% in February for its first increase in two years. The S&P services and manufacturing PMIs were both positive, if only barely. And home sales rose by the most in a year.

Platinum and palladium rose 1.5% and 1.9%, respectively.

At the New York spot close: gold gained $23.70 to $2,184.70; silver dipped 8 cents to $24.85; platinum rose $13.60 to $913; and palladium picked up $18.70 to $1,018.90 an ounce.