Metals Stocks: Gold and silver trade near highest in a year as Fed rate-cut expectations persist

United States

Gold and silver futures trade just shy of the highest level in a year on Thursday as a weaker U.S. dollar and expectations that the Federal Reserve may cut interest rates this year have boosted precious-metals prices. 

Price action
  • Gold futures for June delivery GC00, +1.58% GCM23, +1.58% were up $ 18.10, or 0.9%, at $ 2,043 an ounce on Comex.
  • May silver futures SI00, +1.95% SIK23, +1.95% gained 26 cents, or 1%, to $ 25.83 an ounce.
  • June palladium PAM23, +0.52% was off $ 1.40, or 0.1%, at $ 1,454 an ounce, while platinum for July PLN23, +2.06% was up $ 13.80, or 1.3%, to $ 1,041 per ounce.
  • Copper for May delivery HGK23, +1.02% was up 3 cents, or 0.7%, to $ 4.11 per pound.
Market drivers

After briefly touching their highest levels in more than a year earlier in the week, gold and silver are still holding strong following a spate of U.S. inflation data and minutes from the Federal Reserve’s March meeting showing Fed staff expect a mild recession to begin later this year.

Gold continued to trade near session highs after a report Thursday on U.S. wholesale prices showed more signs of easing inflation. The headline inflation number on the producer-price index decelerated to 3.6% in March from 4.5% in February, a faster decline than economists had expected.

Fed funds futures continue to price in at least two interest rate cuts before the end of the year, according to the CME’s FedWatch tool. On the other hand, the median forecast from the Fed’s “dot plot” has rates remaining on hold until 2024, and Chairman Jerome Powell has said he won’t cut rates until inflation has been vanquished.

“Gold is sitting pretty comfortably above $ 2,000 an ounce after last month’s surge of safe haven demand has now been sustained by the prospect of the Federal Reserve nearing the end of its interest rate hike cycle,” said Rupert Rowling, a market analyst for Kinesis Money, in emailed commentary.

A weaker U.S. dollar is also helping to boost gold, analysts said. The ICE U.S. Dollar Index DXY, -0.47%, a gauge of the greenback’s strength against a basket of rivals, was off by 0.2% on Thursday and has fallen by more than 10% from its September highs, when it touched its highest level in two decades.