Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.7% to close at $1,763 as the dollar rebounded on hawkish comments from a prominent Fed official, undercutting alternative stores of value.

St. Louis Fed President James Bullard said today that interest rates will need to go much higher to bring down the hottest inflation cycle in 40 years. To enter the "restrictive zone" that cools the economy enough to force down prices, Bullard asserted, rates may need to rise as high as 7%, far higher than the current level of 3.75% to 4%.

The dollar rallied of the hawkish rate view, adding 0.4% against major rivals. A stronger dollar pressures gold and other commodities by making them more expensive in other currencies, limiting overseas demand.

Benchmark 10-year Treasury yields initially jumped after Bullard's comments, only to retreat into the red as traders, weighing the recessionary risks associated with such high interest rates, sought safety in government bonds.

The 2-year yield jumped, inverting the yield curve between it and the 10-year to 70 basis points, the most since 1982. An inverted yield curve of this magnitude is often seen as a reliable indicator of future recession.

Adding the recessionary worries, the Philly Fed gauge of business activity plunged to minus 19.4 this month, the lowest level since 2009, excluding the pandemic. And new house construction fell 4.2% in October because of rising mortgage rates

The other precious metals were also lower. Silver lost 2.6%; platinum fell 2.4%; and palladium lost 3.4%.

At the Comex close: December gold slid $12.80 to $1,763; December silver dropped 55 cent $20.98; January platinum lost $24.70 to $991.50; and December palladium shed $71.30 to $2,010 an ounce.