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What’s happening: Gold prices recorded gains on Friday, even as US stocks surged to record highs.
What happened: Continued elevated demand for gold from central banks provided a boost to the yellow metal.
Declining real interest rates also lent support to the safe-haven metal.
Why it matters: Central banks around the world accelerated their gold purchases mainly due to heightened geopolitical concerns.
The US Federal Reserve and other major central banks have been cutting interest rates, lending support to gold prices. Expectations of policymakers announcing further rate cuts in November drove the yellow metal higher.
Weakness in the US dollar also lent support to gold prices as a lower greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.35% to 103.46 on Friday.
Gold prices also received a fillip from the increased demand for the yellow metal from India, ahead of the Diwali festival in late October.
December gold futures surged $22.50, or 0.8%, to close at a record high of $2,730 an ounce on the Comex on Friday, after hitting an intraday high of $2,735.50 earlier in the session. Gold prices have surged around 32% year to date.
What to watch: Investors will continue monitoring monetary policy announcement by major central banks, which is expected to significantly impact gold prices ahead. Movements in the US dollar will also remain in focus.
Context: Shares of American Express fell on Friday, after the company reported downbeat quarterly revenues.
Details: American Express said its revenues (net of interest expense) grew by 8% year-over-year to $16.64 billion, supported by an increase in net interest income and card member spending. However, the figure missed consensus estimates of $16.67 billion.
Card Member spending rose by 6% year-over-year to $387.3 billion in the quarter.
US Consumer Services revenues climbed 10% year-over-year to $7.944 billion, while Commercial Services revenues gained 7% to $3.998 billion. International Card Services revenues rose 11% to $2.936 billion, while Global Merchant and Network Services revenues came in flat at $1.847 billion last quarter.
A larger base of affluent credit card customers allowed American Express to keep smaller credit loss provisions than its rivals. The company’s credit loss provision was $1.4 billion, up from $1.2 billion in the year-ago quarter due to higher net write-offs.
Greater control over incentives and other expenses also helped AmEx top profit estimates. The bank’s total expenses of $12.08 billion was better than market estimates of $12.74 billion.
Adjusted earnings came in at $3.49 per share, exceeded Wall Street expectations of $3.28 per share.
“We have already completed 40 product refreshes globally since the beginning of the year, including the recent launch of our new U.S. Consumer Gold Card. The new benefits and capabilities we have added in popular categories like dining are fueling our growth with Millennial and Gen-Z consumers, who represent 80 percent of the new accounts acquired on the U.S. Consumer Gold Card, and remain our fastest growing consumer cohort overall in the US,” CEO Stephen Squeri said.
Management lowered their revenue growth guidance for 2024 to 9%, from their previous forecast of between 9% and 11%. They raised the earnings forecast to $13.75–$14.05 per share, from their previous outlook of $13.30–$13.80 per share.
How shares responded: Shares of American Express fell 3.2% to close at $276.79 on Friday, following the release of quarterly results. The stock has added around 19% over the past six months.
What to watch: Investors will watch credit card spending by customers, which is expected to impact the company’s overall results ahead.
Other Markets: European indices closed mostly higher on Friday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.38%, 0.39% and 0.21%, respectively, and the FTSE 100 down by 0.3%.
Ukraine launched several drones targeting Moscow and western Russia. The news sent the RUB/USD slightly lower in forex trading this morning.
The People’s Bank of China cut its one-year loan prime rate (LPR) to 3.1% and the five-year LPR to 3.6%, exerting pressure on the CNY/USD forex pair.
Argentina reported a trade surplus of $981 million in September, versus a year-ago deficit of $774 million, which sent the ARS/USD pair higher in forex trading this morning.
Colombia’s leading economic indicator increased by 2.02% year-over-year in August, after a 3.68% gain in the previous month, which lent support to the COP/USD forex pair.
India’s foreign exchange reserves edged lower to $690.4 billion. Despite this, the INR/USD rose slightly in forex trading this morning.
Germany’s producer prices change, China’s foreign direct investment, Central Bank of Brazil’s focus market readout, US CB leading index, as well as Turkey’s government debt.
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