Where Precious Metals Stand After Today's Fed Rate Cut
Despite pulling back following today's 50 basis point Fed rate cut, both gold and silver remain above their key resistance levels, keeping the breakout intact.
I just wanted to post a quick precious metals market update after today’s 50 basis point Fed rate cut. To start, an aggressive rate cut at the outset of an easing cycle is rarely a good sign, as it often signals deeper issues beneath the surface—likely what gold has been sensing since earlier this year. After the rate cut announcement, gold and silver initially surged but then pulled back during Jerome Powell’s press conference, where he sought to downplay the dovish tone of the move. While many precious metals commentators on social media quickly viewed the event negatively, I have a different perspective. Gold's breakout from late last week remains intact, signaling continued strength.
Spot gold (priced in U.S. dollars) only pulled back by 0.4%, keeping it well above its $2,525 support level, as well as the earlier $2,475 support. Pullbacks are a normal part of any bull market, and I remain confident that gold is on track to target $3,000 during the current rally, as I explained in yesterday’s Substack post.
Gold’s breakout is still intact when priced in euros as well:
The same goes for gold when priced in a combination of euros, British pounds, and Swiss franc, which helps to show gold’s movements very clearly:
And the same is also true about gold priced in Chinese yuan:
Silver also pulled back and is resting just above its $30 support level. I'd like to see that support hold, ideally. Silver needs to clear the $32.50 resistance to signal the next leg of the bull market. Until then, its movement is just slop 'n chop.
For those who are still nervous, it is important to note that gold, silver, and gold mining stocks have performed well historically after the first rate cut in a cycle, as the In Gold We Trust report pointed out on Twitter:
In conclusion, despite the initial pullback in both gold and silver following today's 50 basis point Fed rate cut, the broader outlook for precious metals remains strong. Gold's breakout from last week is intact across multiple currencies, and its minor pullback is well within the bounds of a healthy bull market, maintaining support above $2,525. Silver is holding above $30, although it still needs to clear the $32.50 resistance to signal further upward momentum. Historically, precious metals and gold mining stocks have tended to perform well after the first rate cut in an easing cycle, which should reassure those concerned about the market’s immediate reaction. Therefore, today’s pullback should be seen as part of the natural ebb and flow of a longer-term rally.
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