Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged down around 0.1% to close under $1,984 as traders gleaned some profit from this week’s impressive 2.4% rally, driven by weaker inflation and a shifting rate view of the Fed.

As reported earlier this week, consumer inflation was flat for October for the first time in 15 months, pushing the annualized CPI down to 3.2.%. Wholesale inflation was even milder, with the PPI retreating 0.5% in October for the biggest decline since April 2020.

Against this disinflationary backdrop, retail sales contracted last month for the first time since March, suggesting that consumer spending, the bulwark of the economy, may be finally cooling. And along with it, the labor market, as the economy added just 150,000 jobs last month while first-time claims for unemployment rose to a three-month high last week.

Benchmark 10-year Treasury yields tumbled by the most in a month this week as traders speculated that the Fed is finished with rate hikes and might be looking toward rate cuts in coming months. Falling yields are bullish for gold because they decrease the opportunity cost for holding it instead of bonds.

Fed fund futures traders see virtually no chance of rates hikes in either December or January. The odds of a rate cut are now 28% at the March Fed meeting and more than 60% at the May meeting.

A couple of Fed officials tried to push back somewhat on these dovish expectations today. San Francisco Fed chief Mary Daly and Boston Fed President Susan Collins said more evidence of cooling inflation is needed before “additional tightening” is off the table, let alone loosening.

The dollar fell further, dropping another 0.4% on the shifting rate view to post a weekly decline of 1.7%, the biggest since July. A weaker buck boosts gold and other commodities by making them less expensive in other currencies.

The other precious metals were mostly lower for the day but sharply higher for the week. Silver slipped 0.3% but still scored a 7% weekly win. Platinum edged down 0.1% for the session but rose 6.6% for the week. Palladium picked up 0.9% for a whopping weekly advance of 8.2%.

At the Comex close: December gold dipped 0.2%; December silver slipped 8 cents; January platinum edged down $1.10; and December palladium picked up $9.30 to $1,058.90 and ounce.