Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold lost 1% to close under $1,998 as last Friday’s better-than-expected jobs report lifted yields and the dollar, undercutting alternative assets ahead of this week’s two-day meeting of the Federal Reserve.

The government’s nonfarm payrolls report added 199,000 new jobs in November to drop the annualized unemployment rate from 3.9% to 3.7%, the lowest in four months. The headline number, which beat forecasts by 19,000, included around 50,000 workers returning from strikes in the auto industry and Hollywood.

The upbeat jobs data has slightly shifted the outlook on interest rates. While the Fed is almost certain to keep rates unchanged when it meets this week, traders will scour the policy statement and dot-plot forecasts for signs that the resilient labor market may encourage the central bank to keep rates high for longer.

Fed fund futures markets are now pricing in a 43% chance that the Fed will lower rates by a quarter-point in March, down from 57% one week ago.

Tomorrow’s release of the November consumer price index should provide some added clarity on short-term monetary policy. Softer inflation is expected, but a harder reading could push rate cuts further into 2024.

Benchmark 10-year Treasury yields crept higher, pressuring gold by increasing the opportunity cost for holding it instead of bonds for safety.

The dollar added 0.1% as the yen fell after the Bank of Japan signaled that it is unlikely to end its ultra-loose monetary policies at this week’s meeting. A stronger dollar weighs on gold by making it pricier overseas.

The other precious metals were mostly lower, with silver and platinum falling 0.9% and 0.4%, respectively, while outlier palladium rose 1.4%.

At the Comex close: February gold fell $20.80 to $1,997.40; March silver slid 22 cents to $23.06; January platinum slipped $.10 to $915.70; and March palladium added $13.20, to $964.80 an ounce.