Daily Gold Market Report

Turning Crisis into Opportunity:
Banks Exploit Fed’s Rate Cuts for Profit

(USAGOLD – 1/16/2024) Gold and silver prices are down in early trading Tuesday, coming out of the holiday weekend. Gold is trading at $2038.78, down $17.77. Silver is trading at $22.92, down 30 cents. The Wall Street Journal recently reported on how banks are exploiting the Federal Reserve’s Bank Term Funding Program (BTFP), initially created during the 2023 banking crisis. While intended for emergency lending, banks are now using it for profit, borrowing at low rates and earning higher returns on overnight deposits. This situation arose due to market predictions of Federal rate cuts, which lowered the BTFP’s borrowing costs. The program’s usage increased significantly, not due to new financial stresses but due to this favorable rate differential. The Fed’s vice chairman suggests the program, which is set to expire soon, might not be extended. This situation illustrates banks’ ability to utilize monetary policy changes for financial gain.