Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged up 0.1% to close above $1,891 despite a stronger dollar as falling US GDP and the escalating Ukraine war whetted appetite for safety.

The US economy shrank at an annualize rate of 1.4% in the first quarter of 2022 after jumping a robust 6.9% the previous quarter. While disappointing, the print was not as weak as it looked, with most of the drop-off coming from a record-high trade deficit, falling inventories, and a reduction in government spending.

Nonetheless, the yield curve between 2-year and 10-year Treasurys narrowed to 23 basis points after the GDP release, a sign of growing uncertainty about the economic outlook. An inverted curve, when short-dated yields exceed longer-dated ones, is typically a harbinger of recession.

With the Ukraine war now entering its third month, the intensifying conflict between Russia and the West also nudged investors towards haven assets. Russia cut off exports of natural gas to Poland and Bulgaria yesterday as a warning to NATO nations that it is willing to weaponize its energy reserves.

Crude oil rose 3.4% to more than $105 per barrel after reports that Germany is prepared to stop buying Russian crude, removing one of the last impediments to an embargo by the EU. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Gold's gains were capped by another strong day for the dollar, which rose 0.6% to a new 20-year high against a basket of major rivals on expectations that the Fed will raise interest rates more aggressively than its peers. The yen fell to a 20-year low against the buck after the BOJ reiterated its support for ultra-loose monetary policies.

The other precious metals were mixed, with silver dropping 1.4% while platinum slid 0.7% and palladium gained 0.7%.

At the Comex close: June added $2.60, to $1,891.30; May silver dropped 33 cents to $23.13; July platinum dipped 70 cents to $911.10; June palladium picked up $15 to 2,210.10 an ounce.