Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.3% to close under $1,859 as an economic slowdown in China and tighter US monetary policy hammered stocks and rallied the dollar, pressuring alternative stores of value. It was the metal's biggest daily drop in a week.

China's exports grew merely 3.7% for the 12 months through April, according to government data, down from 15.7% through March. Imports increased just 0.7%, reflecting weak demand. China is the world's second largest economy and leading manufacturer.

Anemic Chinese trade data and tighter lockdowns in Shanghai reinforced the outlook that global growth is slowing just as inflation is rising, leading to worries about stagflation and causing risk-off sentiment in equity markets.

All three major US stock indexes tumbled again, with the Dow dropping 1.4% while the S&P 500 lost 2.7% and the tech-heavy Nasdaq 3.8%.

With spooked investors increasingly going to cash, the dollar pushed up to a new 20-year high against major rivals, weighing on gold and other commodities by making them more expensive in other currencies.

The Fed's hawkish rate outlook is also lifting the buck, which has now risen for five straight weeks. Minneapolis Fed President Neel Kashkari, a notable policy dove, warned that inflation is likely to persist despite easing supply chain problems, putting more pressure on the Fed. Raphael Bostic of the Atlanta Fed said half-point rate hikes at likely at the next two or three Fed meetings.

Crude oil fell 6% after Saudi Arabia, responding to China's slowdown, dropped its prices for Europe and Asia. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mostly lower, with silver and platinum sliding 2.5% and 1.8%, respectively, while palladium added 1.9%.

At the Comex close: June gold dropped $24.20 to $1,858.60; July silver slid 55 cents to $21.82; July platinum lost $17.50 to $938.50; and June palladium climbed $38.30 to $2,061.50 an ounce.