Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold eased 0.2% to close under $1,853 as yields and the dollar climbed again ahead of tomorrow’s Consumer Price Index release, pressuring alternative stores of value.

After two months of slight decreases, May consumer inflation expected to show prices are rising with renewed vigor. Most analyst forecast a 0.7% rise for the month, pushing the annual inflation rate back up to 8.4%, from 8.3% last month.

The dollar jumped 0.7% against major rivals as traders speculate that a hot inflation print will press the Federal Reserve toward more aggressive rate hikes in coming months. Higher rates lift the buck by making it more attractive to Forex investors seeking higher yield, weighing in turn on gold and other commodities by making them pricier overseas.

Adding fuel to the dollar’s rally, the ECB announced it will raise interest rates in July for the first time since 2011. The projected quarter-point increase, widely seen as too little, will keep the euro far behind most of its peers.

Benchmark 10-year Treasury edged higher on inflation and rate expectations, increasing the opportunity cost for holding gold instead of bonds as a safe-haven asset.

Gold’s losses were backstopped by a selloff in US equities as investors went to cash ahead of the CPI release. The Dow lost 1.8% while the S&P 500 and Nasdaq dumped 2.3% and 2.7%, respectively.

The other precious metals were also lower. Silver dropped 1.2%, platinum 3.5%, and palladium 1.1%.

At the Comex close: August gold dipped $3.70 to $1,852.80; July silver lost 28 cents to $21.82; July platinum shed $35.70 to $975.90; and September palladium futures shed $22.20 $1,915.60 an ounce.