Gold steadied near an all-time high on Wednesday as new US consumer data further pointed to weakness in the economy, bolstering the case for deeper interest rate cuts in the coming months.
Spot gold stayed flat at $2,655.79 per ounce by 12:30 p.m. ET, having pulled back from a new record of $2,669.97 set in earlier trading. US gold futures gained roughly 0.1% at $2,679.10 per ounce.
The morning rally was fuelled by a report on Tuesday that showed US consumer confidence this month fell the most in three years, following which traders increased bets for more aggressive rate cuts by the Federal Reserve this year.
On the same day, commodity analysts at BMO Capital Markets issued a new outlook for gold, with prices averaging around $2,700 an ounce in the fourth quarter, up 15% from the bank’s previous forecast of $2,350.
Also upping its forecast is UBS Group AG, with the Swiss bank predicting the same average price by mid-2025.
So far this year, bullion has surged by nearly 30% — with the rallies gaining momentum after the Fed’s half-point cut last week. The metal has also been supported by strong central bank purchases and heightened geopolitical tensions driving haven demand.
Silver’s rally
Meanwhile, silver is also benefitting from the rally in its sister metal, with prices rising by about 34% this year.
Joni Teves, a precious metals strategist at UBS Group, attributes silver’s rally to investors looking for catch-up buying opportunities. The bank also upped price target for gold, at $2,700 per ounce by mid-2025.
“The move in industrial commodities is likely also providing an additional boost,” Teves said in a Bloomberg note. “Our bullish outlook for silver is unchanged; we think it can outperform in this environment of rising gold prices, Fed easing and forecasted silver market deficits.”
“The main driver for silver in the last few weeks has been the gold rally — which got another boost yesterday from higher rate-cut expectations following the weak consumer confidence report,” echoed Zhong Liang Han, an analyst at Standard Chartered Plc.
However, the “rally in industrial metals following China’s broad stimulus package was the key driver behind the next leg of the up-move in silver,” Zhong added.
Silver is more exposed to the economic cycle as it is also an industrial commodity used in clean-energy technologies, including solar panels.
