Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.4% to close near $1,883 as dovish statements outweighed hawkish actions from the Fed, weighing on the dollar and lifting alternative stores of value. The metal still finished the week down 1.5% for its third straightly weekly slide.

As widely expected, the Fed raised interest rates by half a point when it met this week. It also launched quantitative tightening, the process of unwinding its $9 trillion balance sheet, in the amount of $47.5 billion per month.

The actions, while aggressive by historical standards, were nonetheless seen as somewhat dovish. Many traders were bracing for a three-quarter point hike and QT of $95 billion per month, which will not begin until September.

In his post-meeting comments, Fed Chair Jerome Powell eased market concerns further by emphasizing that the committee will not "actively consider" rate increases larger than a half-point in upcoming meetings.

Most financial markets swung wildly in response to the Fed's actions and words, with traders caught between the biggest rate hike in 22 years and relief it that the next ones won't be even bigger.

Today, the dollar retreated 0.3% against major rivals as Forex traders speculated that the recent rally, which lifted the buck to 20-year highs, has already priced-in the upside from rate hikes. A weaker dollar lifts gold by making it cheaper overseas.

Gold's rise was capped as benchmark 10-year Treasury yields climbed to a 30-month high above 3.14% after better-than-expected US jobs data raised the prospect of rekindled growth and potentially more inflation. The government's nonfarm payrolls report showed 428,000 new jobs added in April, with the unemployment rate hovering near a 54-year low at 3.6%.

Tighter monetary policy held sway for the week, however, with rising Treasury yields pressuring the metal by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The other precious metals were lower, with silver falling 0.3% while platinum dropped 1.8%. Palladium tumbled 7.1% on growth and pandemic worries in China, one of the biggest consumers of palladium for auto manufacturing in catalytic converters.

At the Comex close: June gold gained $7.10 to $1,882.80; July silver dipped 8 cents to $22.37; July platinum slid $17.40 to $956.00; and June palladium shed $154.20 to $2,023.20 an ounce.