Investors are awaiting the release of the minutes of the last Federal Reserve policy meeting in September for further direction. The report is one of the few federal indicators on the state of the economy that is still set for release since the government shutdown began last week. The shutdown suspended a series of key reports, including the monthly jobs report for September.
December gold futures rose 0.7% Tuesday to settle at $4,004.40 an ounce on Comex, and the front-month contract gained 2.4% in the first two days of the week. Bullion surged 10% in September, the most in six months, after adding 5% in August and gaining 1.2% in July. It’s up 52% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $48.60 (+1.21%) an ounce to $4053.00 and the DG spot price is $4036.80.
Ray Dalio, founder of Bridgewater Associates, one of the world’s largest hedge funds, on Tuesday urged investors to allocate as much as 15% of their portfolios to gold, even as the precious metal rose above the $4,000 threshold. That’s because of gold’s traditional role as a hedge in times of economic and geopolitical uncertainty.
“Gold is a very excellent diversifier in the portfolio,” he said at the Greenwich Economic Forum in Greenwich, Connecticut, as reported by CNBC. Gold “is one asset that does very well when typical parts of the portfolio go down.”
He added that gold is “certainly” safer than the U.S. dollar, Bloomberg reported.
Geopolitical risks, fiscal uncertainties, threats to Federal Reserve independence and the government shutdown – which is in its eighth day – have all spurred gold’s recent rally. Uncertainty in France following the resignation of Sebastien Lecornu as prime minister has also triggered some uncertainty.
Investors are likely to turn to the Fed minutes of the September meeting to inform their outlooks for the next policy meeting Oct. 28-29. The Fed lowered interest rates by 25 basis points in September to 4.00% to 4.25% and is widely expected to cut rates again in October. Lower interest rates are typically bullish for the yellow metal.
Almost 95% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with the rest expecting the central bank to hold rates unchanged. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
The Fed has previously said it’s balancing inflation, which is above the central bank’s target, with a worsening job market as it sets monetary policy.
Front-month silver futures lost 1.9% Tuesday to settle at $47.52 an ounce on Comex, and the December contract decreased 0.9% in the first two days of the week. Silver rose 15% last month, the biggest monthly rally in two and a half years, after climbing 11% in August and gaining 1.5% in July. It rose 21% in 2024. The December contract is currently up $0.895 (+1.88%) an ounce to $48.410 and the spot price is $48.90.
Spot palladium gained 1.9% Tuesday to $1,354.50 an ounce and is up 6.8% so far this week. Palladium rose 14% in September after declining 7.8% in August and climbing 8.8% in July. Palladium dropped 17% last year. Currently, the spot price is up $101.60 an ounce to $1440.00.
Spot platinum slid 0.7% Tuesday to $1,624.00 an ounce but is up 0.6% in the first two days of the week. It increased 15% in September after rising 5.9% in August and dropping 3.9% in July. Platinum lost 8.4% in 2024. The spot price is currently up $52.90 an ounce to $1677.30.
