Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.1% to close under $1,704 on mixed US data as support from pullbacks in the dollar and bond yields was offset by pressure from rebounding equities. The metal ended the week 2.2% lower for its fifth straight weekly decline.

A spate of conflicting US economic data left investors looking both ways repeatedly before crossing the street. On the upside, retail sales jumped 1% in June, suggesting that consumer spending remains strong despite rampant inflation and signs of recession. But actual sales retreated slightly when adjusted for inflation, as calculations are based on total dollars spent.

Consumer sentiment rebounded slightly in July from an all-time low in June, with inflation expectations turning down slightly to the lowest level in 16 months. But Americans remain pessimistic about the economy because of eroding standards of living, with further weakening of the economy expected by year end.

US industrial output fell in June for the first time this year, the Fed reported, with manufacturing dropping 0.5% on softer demand for consumer goods. Industrial output is considered a leading indicator of economic performance and GDP growth.

The Fed’s Empire State index of business conditions, a gauge of manufacturing in New York, perked up slightly in June. But pessimism about activity over the coming six months rose sharply, with that aspect of the index plunging firmly into contraction.

Meanwhile, China’s economy grew only 0.4% in Q2, the least in 30 years, because of draconian Covid restrictions, casting a pall over the global economy.

The schizoid character of the data was reflected in rising demand for both safe havens and risk assets. Wall Street rebounded after six down days, with the Dow adding 2.2% while the S&P 500 and Nasdaq rose more than 1.8%. But benchmark 10-year Treasury yields fell as investors sought out the perceived safety of government bonds.

The dollar also pulled back, dropping 0.5% against major rivals, as traders speculated that soft data and lowered inflation expectations among consumers may keep the Fed from raising interest rates by a full 1% when it meets next week.

Gold came under heavy pressure this week because the odds of a 1% hike in July jumped dramatically after consumer inflation surged to a 41-year high of 9.1%. The dollar, in turn, climbed to fresh 20-year highs, weighing on gold and other commodities by making them pricier in other currencies.

The other precious metals were mixed for the day and lower for the week. Silver gained 2% today but lost 3.3% this week. Platinum added 1.6% today but fell 5.9% this week. Palladium dropped 3.5% for the session and a whopping 15.2% for the week.

At the Comex close: August gold dipped $2.20 to $1,703.60; September silver rose 37 cents to $18.59; October platinum picked up $13.60 to $830.90; and September palladium lost $68.70 to $1,829.40 an ounce.