Gold and silver futures rocketed to start the trading week as both metals continued their massive upward push. Prices have been gaining even as the US dollar strengthens and Treasury yields climb, with gold bugs ostensibly focused on Federal Reserve policy and geopolitical tensions.
December gold futures surged $22.70, or 0.83%, to $2,752.60 per ounce at 12:37 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold is coming off a weekly gain of 3%, adding to its year-to-date rally of 33%.
Silver, the sister commodity to gold, topped $34 to kick off the week. November silver futures soared $1.011, or 3.04%, to $34.245 per ounce. The white metal spiked 9% last week and is up 43% year-to-date.
The financial markets have become ultra-bullish on the combination of falling interest rates and geopolitical chaos.
Investors are pricing in a 50-basis-point interest rate cut at next month’s Federal Open Market Committee (FOMC) policy meeting, according to the CME FedWatch Tool. While the bond market is signaling a more cautious and conservative approach to unwinding monetary policy, traders expect a more fast-and-furious easing cycle heading into 2025.
This would be good news for the metals market since interest rates can influence the opportunity cost of holding non-yielding bullion.
At the same time, US Treasury yields have risen across the board, with the benchmark ten-year yield up 5.1 basis points to 4.126%. The two-year yield edged up to 3.983% while the 30-year bond eyed 4.44%.
Market watchers say gold’s safe-haven appeal has lifted prices amid geopolitical tensions. Although traders are closely following the US presidential election, Wall Street is monitoring the situation in the Middle East.
Israel has reportedly informed the Biden administration that it will not target Iran’s energy infrastructure but rather military facilities.
Gold shrugged off a strengthening greenback. The US Dollar Index (DXY), a measurement of the buck against a basket of currencies, rose 0.07% to 103.57, from an opening of 103.49. The index swelled 0.3% last week and is up 2.2% year-to-date.
A stronger buck is typically bearish for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.
In other metal commodities, November copper futures climbed $0.0405, or 0.92%, to $4.425 per pound. November platinum futures rose $8.70, or 0.85%, to $1,033.20 an ounce. November palladium futures were little changed at $1,085.50 per ounce.