Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 1.4% to close under $1,940 after an unexpectedly hawkish policy outlook from the Fed elevated the dollar and Treasury yields, undercutting alternative stores of value. It was the metal's first down session in the past six and biggest one-day drop in two months.

The Fed kept interest rates unchanged at 5.25% to 5.5% yesterday, as was universally expected. But the Fed's quarterly update of interest rate projections, the so-called dot-plot, presented a significantly more hawkish outlook than anticipated.

A clear majority of committee members foresee another quarter-point increase this year, to a range between 5.5% and 5.75%. In addition, rates are now projected to drop just 50 basis points in 2024, rather than the full 1% forecast at the June meeting.

Fed Chair Jerome Powell stated explicitly in his post-meeting press conference that the central bank is "prepared to raise rates further" if data warrants while emphasizing that rates are likely to stay high for longer.

Benchmark 10-year Treasury yields leapt to a 16-year high above 4.66% on the rate view, pressuring gold by increasing the opportunity costs for holding it instead of bonds as a safe-haven asset.

Tracking higher with yields, the dollar rallied to a six-month high against major rivals on expectations interest rates may remain elevated well into next year. A stronger dollar weighs on gold by making it pricier in other currencies, limiting overseas demand.

The other precious metals were also lower, with silver sliding 0.6% while platinum and palladium dropped 1.9% and 0.9%, respectively.

At the Comex close: December gold lost $27.50 to $1,939.60; December silver slid 15 cents to $23.69; October platinum shed $17.70 to $924; and December palladium fell $11.80 to $1,269 an ounce.