Metals saw continued volatility during October, rising and falling in economic and political events leading up to next month’s election. Ultimately, they ended the month in a similar position to where they started; gold finished down 0.50% while silver gained 0.70% in October. PGMs fared worse with platinum and palladium falling 6.2% and 4.7% respectively.
Gold began the month strong as September’s jobs data missed expectations and President Trump’s COVID diagnosis boosted their haven appeal as equities slid on Friday, October 2. Stocks recovered the following week as President Trump was released from the hospital and surging case numbers made a second round of stimulus more likely. In fact, markets spent much of October analyzing stimulus developments between Secretary of the Treasury, Steven Mnuchin, and House Speaker, Nancy Pelosi. During this time, new cases were rising sharply which seemed to boost equities as investors believed that would further cement a second round of aid. Precious metals and equities were whipsawed most of the month, rising in tandem one day and trading inversely the next as investors analyzed new developments in stimulus prospect, the upcoming election, and rising coronavirus case numbers.
Once the last week of the month rolled around (Oct 26-30), and it was clear no new stimulus would pass Congress before the election, stocks crashed, making October the worst month for equities since March. The Dow fell 6.5% this week to close the month down 4.6%; the Nasdaq shed 5.5% for the week to close October down 2.3%, and the S&P 500 dipped 5.6% to finish 2.8% in the red for the month.
Overall, precious metals outperformed stocks in October and their demand remains strong as inventory levels continue to stabilize. Equities relied too heavily on a second round of stimulus that never arrived, leading to a massive selloff at the end of the month. With COVID cases rising globally and ongoing election uncertainty that will likely last much longer than usual, gold and silver remain attractive to investors heading into November.