Yet Another New High for Gold as ECB 'Breaks Inflation', Cuts Rates
Thursday, 10/17/2024 16:36
GOLD BULLION trading in London saw the precious metal hit yet another new all-time high on Thursday, rising within $5 per ounce of $2700 as the European Central Bank cut its key overnight interest rates once more but longer-term yields in the bond market rose along with the Dollar despite mixed US economic data.
Silver in contrast edged back from yesterday's 7-session highs, holding below $32 per Troy ounce as industrial metal copper also dropped together with agricultural commodities.
China's stock market had earlier fallen again at a 3-week low, erasing 2/5ths of
the past month's 'Beijing stimulus' surge.
But Western stock markets rose, edging New York's S&P500 index back towards Monday's new all-time high and taking Frankfurt's Dax index of German corporations up to a new record, after the European Central Bank cut its key interest rates by 0.25 percentage points as expected.
While the Dax is a total returns index, accounting for dividend payments as well share prices, it has been sharply outperformed by no-income gold in 2024.
Having
failed in 2022 to start raising deposit rates from below zero until inflation had already surged to 8.9%, "We're breaking the neck of inflation," claimed ECB President Christine Lagarde at today's central bank press conference.
"The incoming information shows that the disinflationary process is well on track."
Inflation across the 20-nation currency area was today confirmed at 2.7% per year for September – matching April's 2-year low – but the cost of living including fuel and food was revised lower, down to the weakest inflation in almost 3.5 years at 1.7%.
That news, plus today's ECB cut, sent the Euro down to 3.5-month lows against the Dollar, falling for the 8th session in a row on the FX market to trade 3.3% below late September's 14-month high.
The UK Pound meantime rallied from yesterday's weaker-inflation-news drop, but held on track for its 3rd weekly decline on the run.
US data, in contrast, last night showed a heavier-than-expected drawdown of crude oil stockpiles for last week, suggesting stronger energy demand in the world's largest economy.
US retail sales also accelerated on the latest data, albeit with the slowest year-on-year rise since January at 1.7% according to the Census Bureau.
New claims for jobless support last week retreated from
early October's 13-month high in initial unemployment claims, but continued claims for unemployment assistance rose back towards July's 32-month high.
But US industrial output then came in weaker-than-expected for September, dropping 0.6% in real terms from 12 months earlier.
Already
setting 31 new record gold highs in 2024, the Dollar price of bullion made that 32 at Thursday's 3pm London benchmarking auction, fixing above $2688 per Troy ounce and then rising within $5 of $2700 in spot market trade.
Gold also set new Euro and British Pound records at London's 3pm auction, trading above €2480 and £2068 to top the new benchmark records already set this morning – the 38th and 34th new record days so far this year.
Despite the ECB's rate cut, longer-term borrowing costs in the bond market had already risen ahead of the US retail sales data, and they continued to rise despite the weak industrial figures, coming within 3 basis points of last Friday's 11-week high of 4.12% per annum on benchmark 10-year US Treasury debt.
Crude oil prices meantime stabilized above Wednesday's 2-week low despite Israel claiming it killed three senior officials from the Iran-backed Hamas group today, possibly including the militia's top leader Yahya Sinwar, appointed in July after Israel assassinated Ismail Haniyeh in a raid on Tehran itself.
Medical and food aid meantime went into Gaza for the first time in 2 weeks after the US Government of Joe Biden gave Israel 30 days to improve humanitarian access or face Washington cutting its military assistance.
"US threat to cut Israel military aid is sign of [Washington's]
anger at broken promises" in the year-long conflict, says the BBC, and "signals new willingness to use military assistance as
both a carrot and a stick to influence [Jerusalem's] high-stakes confrontation with Iran and Iran-backed militant groups," says Reuters.
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