GoldPrice.

Happy Friday, traders. Welcome to our weekly market wrap, where we take a look back at these last five trading days with a focus on the market news, economic data, and headlines that had the most impact on gold prices and other key correlated assets— and may continue into the future.

The Federal Reserve this week cut its overnight interest rates for the first time in nearly five years, driving gold prices to $2600/oz— and higher— for the first time in history.

So, What Kind of a Week Has it Been?

They finally did— (50 basis points!)— on Wednesday, as expected, the Federal Reserve’s Open Market Committee shoved the markets into a new cycle by announcing the first cut to overnight interest rates since 2020. And amid a little more chaos and volatility than many expected to see in other major asset classes, the gold market showed that it had reserved a little bit of momentum in the tank even as traders and analysts have expected a cut for weeks. At the time of writing, gold spot looks set to close the week at new all-time highs.

Although we’ve had a full five-session trading week, it makes sense to omit most of how gold traded in the days and hours leading up to the FOMC announcement this week; because pricing was range-bound even through to Thursday for the most part (though we will acknowledge the “range” was a wider-than-usual $30/oz,) and because the announcement of a “double sized” rate-cut and the air of uncertainty about what comes next has put the gold market in a very different environment than that which it was trading in before 2 pm ET on Wednesday.

Gold prices were perhaps held in check immediately following the announcement and press conference by yields on rate instruments like the US 10-year note having a more subdued, less negative reaction to the news, and so the yellow metal somewhat surprisingly held position in the neighborhood of $2580/oz for the rest of the session post-Fed. After a brief spike at the handover from the US’ Wednesday to Asia’s Thursday book, gold prices “crashed” to $2560. But there is a reason that “the first to move is always wrong” is a well-worn adage of commodity and currency-trading; gold began its steep climb from roughly the start of European trading early Thursday morning. Prices flattened out for a time after meeting resistance just below $2600, but Friday’s trading driven by the hubs of London and New York/Chicago have seen the precious metals cut to and smoothly through that psychological level in the final trading session of the week.

And there really is a higher level of uncertainty about what comes next in terms of monetary policy moves and the pace of this easing cycle through the end of 2024. The gold market seems to be reveling in it, at least for now. Whether Jerome Powell & Co. would cut by -0.25% or -0.50% at the first go was strongly debated up until the last minute, and now that they’ve announced the latter, we immediately turn to November 7, where a second 50 bps cut, a “standard” cut of 25 bps, or even no change at all are all squarely on the table. None of these possibilities (or signals toward them over the coming weeks) should present a strong headwind against gold prices. But how well the metal’s chart can consolidate above $2600/oz at the first-ever attempt remains to be seen.

Forthcoming labor market data— the September Jobs Report in two weeks’ time chief among them— will likely present the most volatile trading opportunities in gold. For next week, however, the ticker may be mostly quiet with precious little in the way of new macro data on which the Fed may base their next call. In contrast, we do have a stout schedule of post-meeting public appearances from key FOMC officials, including Powell himself, that could provide some clarity on the thresholds for the Fed consensus to move by 25 or 50 next time.

In the meantime, traders, I hope you can get out and safely enjoy your weekend for the next couple of days. After that, I’ll see you back here next week for another market recap.