Gold News

Gold and Silver Fall on US Rate-Cut Doubts as Middle East Violence Spreads

GOLD and SILVER PRICES fell sharply on Wednesday, erasing 2024's early gains despite political violence spreading across the Middle East from Israel, Gaza and the Red Sea to Iran and Lebanon as betting on steep US interest-rate cuts in 2024 receded.
Down almost $25 to a 2-week low beneath $2040 per Troy ounce against a rebounding US Dollar – and trading over $100 below the all-time record gold price spike of this time last month – the drop in the 'safe haven' precious metal was outpaced by more industrially-useful silver, down 3.7% to 3-week lows beneath $23.
"Whether it's 'sober January' or everyone's back from vacation," says Bloomberg correspondent Lisa Abramowicz, "it feels like this week is becoming a gut check to the past nine weeks of euphoria" over interest-rate cuts from the US Federal Reserve.
Ahead of Wednesday's US job openings data and the release of meeting minutes from the Fed's December 'no change' decision, betting that the US central bank will cut Dollar interest rates at its end-January meeting has now sunk from almost 1-in-5 positions to barely 1-in-10 since this time last week, according to the CME derivatives exchange's FedWatch tool.
While March remains the consensus bet for the first cut, betting on 'no change' that month has now risen from 1-in-10 to more than 1-in-4.
With gold priced in the Dollar losing 1.2% for the day, the US currency rose for a 5th session running on the FX market from last week's 5-month lows.
European stock markets meanwhile lost over 1% on average after the US Nasdaq 100 tech index dropped 1.7% on the first trading session of 2024 on Tuesday, falling further from Christmas Week's new all-time high.
Chart of the Nasdaq 100 tech-stock index vs. the front-month CME gold futures contract, last 6 months. Source: Google Finance
With Western investment sentiment towards gold and silver at record lows in 2023, Tuesday's $5 gain the global gold price saw giant bullion-backed ETF trust fund the GLD shrink yet again as shareholders took profit, dropping in size back towards November's multi-year lows.
Silver's largest such ETF – the iShares SLV product – also shrank, down by another 0.1% yesterday to its smallest in a month.
Already flooded with customer selling, the formerly hot gold coin and small-bar markets of Germany and Austria continue to see heavy profit-taking, according to, with retailers offering to buy back only at "significant discounts" to the bullion price.
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Two explosions in Kerman Cemetery, central Iran were meantime reported to have killed at least 20 people attending a 'martyr' memorial today for Lieutenant General Qassem Soleimani, killed by a US drone in Iraq's capital Baghdad four years ago and whose funeral in January 2020 saw at least 40 mourners die in a stampede.
Israel's military says it is on "high readiness for any scenario" after 7 officials from Hamas were killed in a drone strike in southern Beirut, a stronghold of Iran-backed Hezbollah in Lebanon, including the political-terrorist group's deputy leader Saleh al-Aruri.
"We need to use more force, be less humanitarian" in Gaza, says Israeli ruling coalition politician and former representative to the United Nations Danny Damon, a member of the Likud Party, which just lost a High Court ruling against its plans to block judicial review of Government decisions.
Early Wednesday, Iran-backed Houthi rebels in Yemen attacked another container vessel in the Red Sea, where global shipping giant Maersk re-suspended its fleet's transit yesterday, re-routing traffic around the Cape of Good Hope and adding 10 almost days to Asia-Europe cargo.
Russia meanwhile claimed its air defenses "thwarted" another overnight drone attack by Ukraine on the western city of Belgorod. "We're going to intensify the strikes. No crime against civilians will rest unpunished," said Russia's President Vladimir Putin following Ukraine's weekend attacks.
"Next year, the enemy will feel the wrath of domestic production," countered Ukrainian President Volodymyr Zelensky, adding that his military is now ready to use F16 fighter jets donated by a raft of Nato member states including Norway and Poland.
Pro-Kremlin Bosnian Serb separatist leader Milorad Dodik – who last week rebuked US warnings against breaking up the 1995 Dayton peace deal in the former Yugoslavia – today said he will commemorate the 9th January proclamation of a Bosnian Serb Republic made 3 years earlier, which escalated the descent into war.
Euro gold prices fell less steeply than Dollar bullion, down towards 2023's record-high finish at €1870 per Troy ounce, while the UK Pound gold price hit 1-week lows at £1616.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

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