Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.4% in choppy trade to close near $1,852 after initial losses from rising wholesale inflation shifted to gains from safe-haven buying on bargain-hunting and lingering concerns about the slowing economy.

The producer price index jumped 0.7% in January, more than forecast and the most since last June. Although the 12-month rate moderated to 6% from 6.5% in December, the hot monthly print suggests that inflation may stick around for longer than previously expected.

Immediately, Treasury yields and the dollar surged on the PPI data, knocking gold under $1,837 in intraday trading on speculation that the Fed will be more aggressive with interest rate hikes in coming months.

A pair of Fed officials reinforced the hawkish viewpoint. St. Louis Fed President James Bullard voiced support for a rate hike of 50 basis points when the central bank meets again in March. Cleveland Fed President Loretta Mester echoed that sentiment, adding that she thought one was warranted at the last meeting, when the Fed hiked by a quarter-point.

But yields and the dollar subsequently retreated from the earlier highs, pushing gold into gains, after soft manufacturing and housing data reinforced concerns that a more aggressive Fed could push the economy into recession.

The Philly Fed manufacturing gauge plunged to negative 24.3 in February, down from negative 8.9 in January. It was the lowest reading since the depth of the pandemic in May 2020. And housing starts dropped 4.5% in January for the fifth straight month of declines.

The other precious metals were also higher, with silver adding 0.6% while platinum and palladium rose 1.4% and 5.6%, respectively.

At the Comex close: April gold gained $6.50 to $1,851.80; March silver added 14 cents, to $21.71; April platinum picked up $13.20 to $931; and March palladium jumped $81.20 to $1,525.70 an ounce.