New highs for gold prices but individual demand softens; silver prices rally

The election is around the corner. The candidates’ economic positions have come to the fore, with a common denominator. Whether Vice President Harris or former President Trump wins, the new president’s policies mean big deficits. Additionally, tariffs enacted by the Trump administration might fan higher prices. Interest rates jumped in October. 10-year Treasury yields added a massive 53 basis points to yield 4.28%. Moreover, the Fed could moderate easing due to strong October data.?

Traditionally, gold prices fall when yields jump. But these are complicated times. October 7 marked the one-year anniversary of the Hamas invasion. Mid-East turmoil heightened further this month. The Ukraine war continues. Against this backdrop, precious metals prices rallied in October. Gold prices traded a new high of $2,801.801 on the 30th. They settled the month at $2,749.30 for a monthly gain of $89.90, or 3.38%. Silver prices added $1.335, or 4.24%, to settle at $32.795. They traded as high as $35.07 on the 23rd. Palladium prices jumped 11.50%, or $115, to $1,115.00 on talk of a ban on Russian palladium. Platinum prices added 0.86% to close at $999.60.?

In 2021, 2022 and 2023, US annual coin and bar demand in gold averaged an extraordinary 3.6 million troy ounces. In 2024, prices are up 33% and FideliTrade customer activity has changed. Buying has lessened and selling has become more regular. New data confirms this trend across the industry. Bar and coin demand for 2024 could be 36% lower than 2023. That is, if volumes continue to be apace. Why the drop? Perhaps either profit taking or the need for cash.??

Looking ahead?

Election day: Nobody likes uncertainty (except options traders). Until election day arrives, we have odds from political betting markets. As of October 31, Kalshi futures market’s odds of Trump winning are 62%. The odds of a Harris win, 38%. Traditional polls show a dead heat. If voters take betting markets seriously, will they just stay home – meaning the odds influence the election???

After the election: A sweep of the House and Senate could unleash spending. The Wall Street Journal suggests a Republican sweep could mean a higher deficit. The GOP platform includes tax cuts. Whether the government is divided will also bear on how easily Congress can extend the debt ceiling. It expires on December 31.?

November 6-7: The Federal Reserve meets and will consider October’s strong economic data. Its favored inflation gauge, the core personal consumption expenditures price index, was up 2.7% from last year. GDP expanded at an annualized rate of 2.8%. A slowdown in interest rate cuts could be in order. With affordable housing a key issue, the real estate market may not like that news – existing home sales are as low as they have been in 29 years.?

[1] All prices are CME most active contract unless otherwise indicated.

Jennifer Ropiak is a precious metals market specialist with over 30 years’ experience, including 20 years of trading (15 at Morgan Stanley). In 2014, Jennifer launched Trusted Partner Metals, an independent consultancy whose clients span the metals industry.??

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