Gold Prices Hit All-Time Highs Of $2,500 As Traders Jump On Rate-Cut Train: Mining Stocks On The Move Friday

Gold prices surged to record highs above $2,490 per ounce on Friday, rising more than 1.7% at 9:50 a.m. EST. A weakening U.S. dollar and declining Treasury yields fueled the rally.

• The U.S. dollar index (DXY), as tracked by the Invesco DB USD Index Bullish Fund ETF UUP, dropped 0.4%
• The greenback is down nearly 1% against the Japanese yen.
• Treasury yields softened, with the 2-year yield decreasing by 4 basis points to 4.05%
• The 10-year yield edged down by 2 basis points to 3.89%.
• Year-to-date, gold is up 21%, setting the stage for its strongest annual performance since 2020 when it gained 25%.

The rise in gold prices reflects growing anticipation that the Federal Reserve will initiate a series of rate cuts.

Inflation Decelerates

July's inflation data, for both producer and consumer prices, slightly undershot expectations this week, reinforcing the disinflationary trend that is firmly on track.

Producer prices rose just 0.1% month-over-month in July, following a 0.2% increase in June, and came in below the 0.2% forecast. On an annual basis, producer inflation slowed to 2.2%, down from 2.7% in June.

Consumer inflation also decelerated for the fourth consecutive month, with the annual inflation rate dropping to 2.9% in July, the lowest since March 2021, compared to 3% in June. Core inflation, which excludes volatile food and energy prices, also eased to 3.2% from 3.3% in June, matching expectations.

Traders have slightly moderated their expectations for a large 50-basis-point Fed rate cut in September, now leaning towards a smaller 25-basis-point cut, with a 73% probability priced in. By the end of the year, markets are pricing in a total of 80 basis points in cuts, implying two additional 25-basis-point reductions at the Fed's November and December meetings.

Chart: Largest Gold-Backed ETF Reaches Record Highs

Gold ETFs See Strong Inflows

In July, global gold ETFs, which include the SPDR Gold Trust GLD as well as several others, had their strongest month since April 2022, attracting $3.7 billion, marking the third consecutive month of inflows, according to data from the World Gold Council (WGC).

North American funds led the charge, with inflows of $2 billion, more than offsetting minor outflows in May and June.

The WGC commented that “July was unprecedented on the political front with the assassination attempt on Trump followed by Biden stepping down from the presidential race. Gold ETF inflows around both dates suggest increased safe-haven demand.”

Jackson Hole Symposium in Focus

Looking ahead, all eyes are on the Jackson Hole Symposium, scheduled for Aug. 22-24, which comes just weeks before the Fed’s anticipated rate cuts in September.

Historically, gold has shown strength following the Jackson Hole Symposium, as the WGC highlighted. This has often been followed by a pullback as bond yields tend to rise in the subsequent weeks.

Gold Miners Moving On Friday

The five best-performing gold mining stocks within the VanEck Gold Miners ETF GDX by 10:00 a.m. ET included:

Company	1-day %chg
SSR Mining Inc. SSRM	5.06%
Emerald Resources NL EMR	4.43
K92 Mining Inc. KNT	4.07
Equinox Gold Corp. EQX	3.51
Coeur Mining, Inc. CDE	3.49

Industry heavyweights such as Newmont Corp. NEM and Barrick Gold Corp. GOLD were 0.8% and 2.3% higher respectively.

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