Netanyahu’s Actions Supportive of Gold Price

It has been one week since the Federal Open Market Committee (FOMC) cut interest rates. Thus far, the reaction from gold has been modest, rising by 1% since Chairman Powell announced the 50-basis-point rate cut. Silver, for its part, is up just under 2% and continues to be the more volatile of the two metals under current market conditions.

Investors will continue to monitor global economic indicators, including this week’s U.S. job reports, which may provide insights into how aggressive the Fed and other central banks might be with their next round of rate cuts.

Historically, gold and silver have performed well in the six-month period following the initiation of rate cuts. During the 2019 rate-cutting cycle, gold, silver, platinum, and palladium saw increases of 6%, 10%, 10%, and 16%, respectively.

Shifting our attention to what I consider the single most important factor affecting the price of gold and silver right now: macro-geopolitical risk. In a somewhat surprising escalation, Israel's military has expanded its operations beyond Gaza and, as of yesterday, has sent ground forces into Lebanon on an offensive aimed at eradicating Hezbollah. This significant escalation marks a new chapter in what has now become a regional conflict, likely to further intensify given the longstanding history and animosity between the involved parties. Ultimately, increased geopolitical risk will support gold and silver, particularly as central bank buying—which has been very strong since the outbreak of COVID in 2020—continues. I expect this trend to persist as long as global tensions remain high.

Considering the price trajectory of gold and silver for the remainder of 2024, and the solid support level established for both metals, it is possible that we could see gold reach $2,800 to $2,900, and silver reach $35 to $40 before the end of the year.