Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.6% to close under $1,721 on profit-taking as the dollar and Treasury yields rebounded following upbeat jobs data and hawkish comments from Fed officials. The metal had rallied 3.5% over the previous two sessions on hopes that slowing growth would trigger a Fed pivot.

The ISM services index slowed in September but still showed continued growth and strong hiring at companies like hotels and restaurants. The services sector comprises roughly two-thirds of the economy.

ADP reported the US private sector added 208,000 new jobs in September, up from 185,000 in August. The respectable total suggests the government's nonfarm payrolls report may show substantial job growth when released on Friday, giving the Fed adequate latitude to keep raising interest rates.

San Francisco Fed President Mary Daly reinforced the hawkish rate outlook, saying today that the Fed remains "resolute at restoring price stability" and higher interest rates are needed. She dismissed talk of a pivot toward rate cuts in 2023, saying "I don’t see it at all."

Fed Governor Philip Richardson echoed this view, declaring inflation the Fed's most serious problem and warning that high interest rates are coming, even if they result in "an extended period of below-trend growth."

After two quarters of negative growth, GDP is expected to turn positive in Q3 as the US trader deficit fell to a 15-month low in August. The shrinking gap is projected to add 3% to GDP, quelling talk of recession and giving the Fed some scope to hold rates high for longer.

Benchmark 10-year Treasury yields rebounded above 3.75% on rate expectations, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar also surged after its two-day selloff, adding nearly 1% against major rivals. A stronger dollar weighs on gold and other commodities by making the pricier in other currencies, limiting overseas demand.

The other precious metals were also lower, with silver dropping 2.6% while platinum and palladium fell 2.1% and 3.2%, respectively.

At the Comex close: December gold slid $9.70 to $1,720.80; December silver dropped 55 cents to $20.54; January platinum lost $19.10 to $914.60; and December palladium shed $74.30 to 2,255.90 an ounce.