Gold Price Sets New Friday Fix Record as Fed Rate-Cut Bets Jump
Friday, 7/12/2024 16:17
The PRICE of GOLD hit a new week-end record in London's bullion market today, setting a 3pm Friday benchmark above $2405 per Troy ounce as betting that the US Federal Reserve will soon start cutting interest rates grew again following yesterday's soft inflation data.
Global stock markets also rose, shrugging off US claims of a Russian plot to assassinate the CEO of a major German weapons suppler to Ukraine and setting a new high on the MSCI World Index as US President Joe Biden ended the Nato summit in Washington by calling Kamala Harris – his running mate for November's election – "Vice President Trump" and calling Ukraine's leader
Volodymyr Zelensky "President Putin".
Western government bonds held onto yesterday's price jump, keeping the annual rate of interest offered by 10-year US Treasury debt beneath 4.20%, the lowest since end-March.
With
so-called "supercore" inflation running very slightly negative for the 2nd month in a row on June's CPI data, betting in the US futures market this morning gave a consensus forecast for year-end Fed rates of 4.76%.
That was down by 0.12 points from Friday last week after the odds a 'no change' decision at September's Fed meeting
collapsed on Thursday's inflation data, falling further to drop below 1-in-50 today.
According to
data from the CME derivatives exchange, that's the lowest since early March.
Back then, bullion prices were trading $200 lower than now at
what were new record gold highs.
"Note," says precious metals strategist
Nicky Shiels at Swiss bullion refining and finance group MKS Pamp, "Powell was warned during
this week's [Fed] testimony to Congress not to cut before the election if he wants to keep Republican support for Fed independence.
"[But] for now, whether they cut in September or after the election in Nov or Dec, doesn't matter – cuts are coming in 2024 and the [gold] market has been pricing in rate cuts for the past year.
Even though they "never came" so far, says Shiels, "the market just rolls it forward and keeps pricing in rate cuts."
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Thursday's dramatic price rise in bullion pricing saw the giant GLD gold-backed ETF expand 0.2% in size to its largest in over a month.
World No.2 and smaller New York-listed
gold ETF the IAU also expanded, growing by 0.2% for the week so far.
But
demand in China – gold's No.1 consumer market – appeared to back off today as Yuan prices for Shanghai settlement rose for the 3rd session running to ¥564 per gram, the highest since mid-May's all-time records.
That saw the Shanghai premium to London quotes halve from Thursday's level, slashing this week's average incentive for new bullion imports into China to less than $17 per Troy ounce.
Twice the typical level pre-Covid, this marked the smallest weekly Shanghai premium since this time last year.
London silver prices had earlier traded around $30.70 per Troy ounce at the city's midday benchmarking auction, adding 0.4% to last week's 4.1% rise with the highest Friday Fix since end-May's 11-year high.
Shares in Rheinmetall (ETR: RHM) were meantime little changed by
a report from CNN that US intelligence alerted their German counterparts earlier this year to foil a Russian plot to murder Armin Papperger, CEO of the 135-year old auto and weapons manufacturer.
A key supplier of artillery shells and military vehicles to Ukraine, RHM today held 70% higher year-to-date on the Frankfurt stock market, nearly 450% above the eve of Russia invading Ukraine in 2022.
"All this is presented
in the style of fake stories," responded the Kremlin's
ever-busy spokesman Dmitry Peskov, who has previously denied
Moscow's involvement in arson attacks on a Ukraine-linked warehouse in London, an Ikea furniture store in Vilnius, and the Marywilska 44 shopping centre in Warsaw.
"One can't treat such reports seriously."
While the gold price in Dollars set a new Friday record today,
the UK gold price in Pounds per ounce lost 0.4% from last weekend at £1853 – 3.9% below mid-April's record weekend level – as the new Labour Government of Keir Starmer marked its first week in power.
Euro gold prices added 0.3% from last Friday to trade at €2207 per ounce around the 3pm benchmarking auction, still €50 below its record of 13 weeks ago.
Tokyo's Topix index today lost 1.2% from Thursday's fresh record high after Japan's Ministry of Finance warned overnight that it will intervene to try reversing the Yen's plunge on the currency market if traders keep betting on it to fall.
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