AGE Daily Gold Update

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

4/1/2024: Gold touches new record high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.9% to close at $2,236.50 after the government’s modest PCE report on inflation, released during the Good Friday market closure, fueled expectations that the Fed will begin cutting interest rates in coming months. The New York spot gold price reached a new all-time high of $2,257.77 in intraday trade. Silver rallied 1.1% to $25.07 an ounce.

The Fed’s preferred gauge of inflation, the personal consumption expenditures index, rose 0.3% in February, beating forecasts of 0.4%. The yearly rate edged up to 2.5% from 2.4%, while the core rate edged down from 2.9% to 2.8%.

While certainly more stubborn than the Fed would like, the PCE print was unlikely to change the central bank’s outlook for interest rate cuts, which are widely expected to begin in June. The March revision to its dot-plot forecast showed three quarter-point cuts this year.

Separately, the New York Fed reported today that underlying inflation pressure eased in February. The bank’s Multivariate Core Trend Inflation gauge, which assesses the longer-run trend in price pressures, dropped to 2.9% from 3% in January.

But upbeat US economic data is testing the prospect of a June debut for rate cuts. The ISM said the manufacturing sector grew in March for the first time since September 2022, edging barely into expansion after 16 straight months of contraction.

Benchmark 10-year Treasury yields jumped back above 4.3% on the strong ISM reading. Higher yields are a headwind for gold because they increase the opportunity cost for holding it instead of bonds for safety.

Tracking with yields, the dollar added 0.5% against major rivals, further capping gold’s rise by making it pricier in other currencies.

While the prospect of falling interest rates has helped propel gold’s remarkable 9% rise this year, it is by no means the only driver. Geopolitical tension in Ukraine and the Middle East are fueling global safe-haven demand. Economic weakness in Europe and Asia is pushing investors to alternative assets. Central banks, especially China’s, are buying aggressively to diversify their reserves. And physical demand in China is heightened because of economic uncertainty and the lingering real estate crisis.

Platinum and palladium fell 0.7% and 1.7%, respectively.

At the New York spot close: gold gained $19.10 to $2,236.50; silver added 28 cents, to $25.07; platinum slipped $6.80 to $900.90; and palladium shed $17.50 to $1,004 an ounce.