Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.4% to close at $1,959 as rallies in stocks and the dollar combined with higher Treasury yields to pressure demand for alternative assets.

Benchmark 10-year Treasury yields climbed above 2.9% for the first time in three years after hawkish comments from Fed officials prompted traders to price in sharply higher interest rates. Rising yields are a headwind for gold because they increase the opportunity cost for holding it instead of bonds as a safe-haven asset.

Chicago Fed President Charles Evans said today that several rate hikes of 50 basis points may be necessary to bring inflation under control, lifting the Fed funds rate to 2.5% this year and 3% in 2023.

Separately, St Louis Fed President James Bullard called for even more aggressive action, saying a hike of 75 basis points "is not out of the question" and the benchmark rate should be pushed to 3.5% this year.

All three major US stock indexes climbed as upbeat earnings reports stoked risk appetite despite the prospect of tighter money. The Dow picked up 1.5% while the S&P 500 rose 1.6% and the Nasdaq 2.2%.

The dollar added 0.2% against a basket of rivals and rocketed to a 20-year high against the yen on expectations that the Fed will tighten policy more aggressively than its peer, especially the Bank of Japan. A stronger dollar weighs on gold by making it pricier in other currencies.

The other precious metals were also lower, with silver sliding 2.9% while platinum and palladium lost 3.1% and 2.7%, respectively.

At the Comex close: June slipped $27.40 to $1,959; May silver dropped 76 cents to $25.39; July platinum lost $31.80 to $988.70; and June palladium shed $64.70 to $2,380.40 an ounce.