Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to close above $2,031 as Treasury yields and the dollar declined ahead of tomorrow’s conclusions of the Fed’s two-day meeting on monetary policy.

The Fed made a dovish turn at its December meeting, essentially declaring a coming pivot toward rate reductions. While several Fed officials have tried to talk down the likelihood of a March rate cut, last week’s PCE data showing soft inflation gives the central bank room to cut sooner rather than later.

Benchmark 10-year Treasury yields slipped to a two-week low just above 4% as traders speculated that Fed Chair Jerome Powell will refrain from hawkish commentary in his statement after the meeting, leaving the prospects for a dovish turn intact. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds for safety.

Escalating tensions in the Middle East are also underpinning the gold price after Iran-backed militants killed three US soldiers in a drone attack over the weekend, prompting concerns that the Gaza war may spread.

Tracking lower with yields, the dollar dropped 0.2% against major rivals, supporting gold by making it cheaper overseas.

The IMF updated its World Economic Outlook, revising global growth up to 3.1% in 2024 from 2.9% in 2023. The US economy is now expected to achieve a soft landing, with growth slowing to a solid 2.1% in 2024 as inflation recedes because of higher interest rates.

Consumer confidence climbed to a two-year high in January, the Conference Board reported, reflecting falling inflation and ongoing economic growth.

The other precious metals were lower, with silver dipping 0.1% while platinum dropped 0.7% and palladium slipped 0.2%.

At the New York spot close: gold gained $6.30 to $2,031.50; silver edged down three cents to $23.11; platinum slid $6.60 to $931.70; and palladium dipped $1.70 to $979.50 an ounce.