AGE Daily Gold Update

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

10/26/2023: Gold consolidates near $2,000

Source: Bill Musgrave, American Gold Exchange

Austin — Gold consolidated its recent gains, adding 0.1% to close above $1,997 despite an uptick in the dollar, as safe-haven demand because of Middle East turmoil outweighed strong US data.

The US economy grew 4.9% in Q3, defying expectations of recession and more than doubling the growth of the first two quarters. Resilient consumer spending rose 4%, fueling most of the increase, while government spending also provided a lift.

Separately, orders for durable goods leapt 4.7% in September behind a sharp rise in demand for airplanes at Boeing. If planes and cars are factored out, orders rose a more modest 0.5%.

Despite the knockout GDP print, Fed fund futures traders still expect the economy to slow substantially and the Fed to reduce, not raise, interest rates. The odds of another rate hike this year fell under 20% from 29% yesterday. The odds of a rate cut by next May rose to 36% from 25% yesterday. And the likelihood of a rate cut by the end of 2024 is nearly 100%, according to CME FedWatch.

US equities fell sharply on disappointing earnings reports and concerns about the war in Gaza. The Dow dropped 0.8% while the S&P 500 lost 1.2% and the Nasdaq 1.8%.

Benchmark 10-year Treasury yields receded under 4.85% as investors shifted toward safety. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Gold’s gains were stemmed by an uptick in the dollar, which added 0.2% against major rivals after the strong US GDP data. A stronger buck is a headwind for gold and other commodities because it makes them more expensive in other currencies, limiting overseas demand.

The metal has now risen around 9% in the past two weeks on concerns that the violence in Gaza could spread to other parts of the Middle East, damaging the global economy and disrupting oil supplies.

The other precious metals were mostly higher, with silver an p0alladium picking up 0.4% and 0.8%, respectively, while platinum fell 0.4%.

At the Comex close: December gold rose $2.50 to $1,997.40; December silver added a dime, to $22.91; January palladium dipped $3.40 to $909; and December palladium gained $9.20 to $1,142.80 an ounce.