Gold

Investors continue to be optimistic that the Federal Reserve will begin a series of rate cuts throughout 2024. The real question is not if the Fed will cut rates next year, but when they will begin and how deep the interest rate cuts will be. Analysts are split as to when the Federal Reserve will implement its first rate cut next year.

This morning, the US Bureau of Economic Analysis released the PCI index for November. As this report is the preferred inflation measure of the Federal Reserve, it garners our attention. The report revealed that headline inflation in November rose by 2.6% on an annual basis, well below economic expectations of 2.8%.

Today, the BEA (Bureau of Economic Analysis) released its third and final estimate for third quarter GDP. The report revealed that GDP increased at an annual rate of 4.9%, which is a downward revision from the previously reported numbers, which came in at 5.2%.

Gold futures are currently trading lower by $10.40 or a decline of 0.51%. This is a larger percentage decline than gains witnessed in the dollar today. Because gold is paired against the dollar, there is a 100% inverse correlation between dollar strength or weakness and gold prices rising or falling.

After Friday’s price decline which can now be interpreted as a possible one-off, gold prices have firmed for the first two trading days of the week. With the holiday season beginning in just a few days, we can anticipate lower volume begin to come in to the markets. Although gold futures traded to a lower low and a lower high yesterday, the net result was a gain of $7.40.

After trading to a high of $2059.60 today, gold futures closed lower. As of 4:20 PM, gold futures basis the most active February 2024 contract is down $17.90 or 0.87% and fixed at $2033.40. Today’s selloff follows two days of strong gains that occurred immediately after the conclusion of this month’s FOMC meeting.

A dovish pivot is the best way to describe yesterday’s Fed statement and Chairman Powell’s press conference from the last FOMC meeting of the year. Typically, when deciphering “Fed speak” investors look for nuances and word choices for insight into the internal thinking of Federal Reserve members’ comments.

The Federal Reserve concluded its last FOMC meeting of the year, and as expected, they kept their benchmark interest rate unchanged. They also released an updated economic forecast in its Summary of Economic Projections (SEP).

Two important events that will shape the economic fabric occurred today. The November CPI was released by the BLS this morning, and the last FOMC meeting of the year began today.

The U.S. Bureau of Labor Statistics released the latest information on inflation vis-à-vis the November Consumer Price Index report. 

Gold prices plunged this week, giving up almost $75 per ounce. This occurred after hitting the highest value on record when gold traded to approximately $2153 on Monday, only to close over $100 below the new record high at $2048. Although two out of the five trading days this week resulted in gains (Wednesday and Thursday), these gains were tepid at best.