Gold fell on election results and a surging dollar as well as bond yields after former U.S. President Donald Trump was named the President-elect. The increases in the other assets put pressure on gold as an alternate investment.
Republicans also took control of the U.S. Senate while the house sits on a knife edge as votes are still being counted. The dollar surged the most since 2020 and Treasury yields and equity futures jumped.
Front-month gold futures rose 0.1% Tuesday to settle at $2,749.70 an ounce on Comex, and the most-active December contract was little changed for the week. Bullion rose 3.4% in October after gaining 5.2% in September and advancing 2.2% in August. The metal is up 33% in 2024. The December contract is currently down $86.50 (-3.15%) an ounce to $2663.20 and the DG spot price is $2660.80.
Markets will continue to respond to election returns over the next few days, and investors are anticipating another interest rate cut by the Federal Reserve on Thursday at the central bank’s penultimate monetary policy meeting of the year.
The Fed is overwhelmingly expected to cut interest rates both scheduled policy meetings left this year, according to the CME FedWatch Tool. The central bank cut interest rates by 50 basis points in September to 4.75% to 5.00%. It had kept them at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation. Most investors tracked by the tool are expecting rates to end the year at 4.25% to 4.50%.
Lower interest rates are typically bullish for gold, making the yellow metal a more attractive alternate investment asset. The Fed has said it closely watches inflation and labor market data when setting monetary policy.
The final U.S. monthly jobs report before both the election and the Fed meeting came out Friday and showed that employment increased by 12,000 in October, well below economists’ expectations for a 112,500 gain. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came at 2.1% year-on-year in September, almost at the Fed’s inflation target long-held inflation target of 2% in data released last week.
Front-month silver futures rose 0.5% Tuesday to $32.78 an ounce on Comex, and the December contract increased 0.3% in the first two days of the week. Silver advanced 4.3% in October after rallying 7.9% in September and gaining 0.7% in August. It’s up 36% in 2024. The December contract is currently down $1.675 (-5.11%) an ounce to $31.100 and the spot price is $31.01.
Spot palladium added 50 cents Tuesday to $1,082.50 an ounce, though it’s down 3.2% so far this week. Palladium increased 11% in October after gaining 3.2% in September and rising 3.2% in August. Palladium is down 3.1% this year. The current spot price is down $44.60 an ounce to $1042.00
Spot platinum gained 1.8% Tuesday to $1,005.00 an ounce and is up 0.5% so far this week. Platinum rose 1.5% in October after increasing 5.6% in September and sliding 5.2% in August. Platinum has advanced 0.8% in 2024. The spot price is currently down $31.00 an ounce to $973.70.
