Gold holding on as dollar rises this morning. The dollar had slumped late yesterday boosting the yellow metal in the early hours. So far, gold is holding above $1,500 and is striving for its first weekly rally in a month. Palladium climbed to a new record.
The U.S. dollar had slipped after the Fed’s rate cut on Wednesday, dropping .3% on Thursday, but concerns over geopolitical tensions and a slowing global economy have boosted the dollar’s attractiveness.
The December gold contract slid 0.6% Thursday to settle at $1,506.20 an ounce on Comex and was up 0.5% in the first four days of the week. Currently, the December contract is at $1,508.90. Silver didn’t soften as much as gold, with the most-active December contract down 0.2% Thursday to $17.88 an ounce on Comex. The metal has advanced 1.8% this week through Thursday. Currently, silver is at $17.895.
Spot palladium rose 1.8% Thursday and touched a new record. It’s up 0.6% this week. Spot platinum gained 0.7% Thursday and fell 1.1% in the first four days of the week.
After a series of monetary policy decisions this week, investors are likely to shift their focus to the ongoing trade dispute between the U.S. and China and the state of the global economy. The world’s two largest economies are expected to hold high-level talks next month. The OECD said Thursday that the global economy is growing at the slowest rate since the recession.
The OECD downgraded its outlook for global GDP by 0.3 percentage point for 2019 to 2.9% and cut its growth forecast for 2020 by 0.4 percentage point to 3%. The Paris-based agency also cut its outlooks for the U.S. and China for both years.
Gold has climbed this year as it became more attractive as a safe haven amid uncertainty over the U.S.-China trade war, fears of an economic recession and heightened speculation of monetary easing from central banks around the world. The U.S. Federal Reserve announced its second consecutive interest-rate cut on Wednesday, but the Bank of England and Bank of Japan held rates steady on Thursday.
The CME FedWatch Tool shows a slight tipping against another interest rate cut when the Fed meets again on Oct. 30. The probability of a cut was at 42.8% early Friday, with the same percentage predicting a 25-basis-point reduction. The odds of no cut were 57.2%.
The European Central Bank cut interest rates deeper into negative territory last week, and ECB Chief Mario Draghi pledged an indefinite amount of quantitative easing to jumpstart the euro-zone’s economy.
Friday is what’s known as quadruple witching day for U.S. markets. Stock index futures, stock index options, stock options and single stock futures expire simultaneously once a quarter — on the third Fridays of March, June, September and December. Trading on quadruple witching days can be more volatile than usual.