Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 0.8% to close under $1,958 despite falling Treasury yields as oil prices eroded and investors became less worried about an expansion of the Gaza war. It was the metal’s third straight lower session.

Crude fell more than 2% to the lowest level in three months as concerns about potential supply disruptions in the Middle East gave way to concerns about slower global demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Data from China, the world’s biggest oil importer, should exports of goods and services fell sharply in October. The Eurozone is sliding closer to recession and US GDP is expected to slip to 2.1% in Q4, according to the Atlanta Fed, potentially reducing demand for oil.

Meanwhile, with the war in Gaza showing few signs of expanding to include Hezbollah and Iran, some of the risk premium that rallied gold by 8% in October is starting to drain away.

Declining Treasury yields helped to stem gold’s decline. Benchmark 10-year yields slid back under 4.5% to the lowest level since September as traders become increasingly convinced that the Fed has achieved peak interest rates. Lower rates support gold by decreasing the opportunity cost for holding it instead of bonds for safety.

Fed fund futures trading posits a 17% likelihood of aa rate increase by January and an 18% chance of a rate cut by March.

The dollar was virtually flat.

The other precious metals were mostly lower, with platinum and palladium losing 3% and 0.2%, respectively, while silver rose 0.6%.

At the Comex close: December gold dropped $15.70 to $1,957.90; December silver added 14 cents, to $23.73; January platinum shed $26.50 to $871.50; and December palladium slid $2.40 to $1,060.40 an ounce.