Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.5% to close at $1,934 as concerns over the Ukraine war and inflation boosted safe-haven inflows despite higher bond yields and a stronger dollar.

Evidence of atrocities committed by Russian troops in the Ukraine mounted over the weekend as the bodies more than 400 of civilians, many bound and executed, were found in areas retaken by Ukrainian forces near Kyiv.

European leaders called for tougher sanctions against Moscow including a boycott of Russian natural gas, which supplies around 40% of EU consumption. The additional measures are likely to stoke sharply higher fuel prices throughout the EU, with knock-on effects in other global markets.

US benchmark WTI crude surged 4.3% to more than $1.3 per barrel on the prospect of deeper sanctions. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Following last week's report that the PCE index, the Fed's preferred inflation gauge, climbed to 6.4% for the 12 months through February, two new additional Fed members are calling for more aggressive monetary tightening.

New York Fed President said the central bank could begin reducing its nearly $9 trillion balance sheet in May, well ahead of schedule, to get a jump on controlling prices. Mary Daly of the San Francisco Fed, formerly a proponent of quarter-point hikes, said the case has strengthened for a series of half-point hikes instead.

The dollar added 0.4% against major rivals to the prospect of faster tightening. Higher interest rates lift the buck by attracting Forex investors seeking yield, pressure gold and other commodities in turn by making them more expensive in other currencies.

Also capping gold's rise, benchmark 10-year Treasury yields pushed back above 2.4% on the inflation view. Higher yields are often a headwind for gold because they increase the opportunity cost for holding it instead of bonds as a safe-haven asset.

However, the curve between 2-year and 10-year Treasury yields inverted further as investors prepared for higher inflation while questioning the economy's health in the longer term. An inverted yield curve is soften seen as a precursor to recession.

Former Federal Reserve Governor Lawrence Lindsey warned today that inflation may stifle consumer spending, possibly tipping the US into recession as early as this summer.

The other precious metals were mostly higher, with platinum and palladium picking up 0.2% and 0.3%, respectively, while silver slipped 0.3%.

At the Comex close: June gained $10.30 to $1,934; May silver dropped 6 cents to $24.59; July platinum picked up $2.40 to $991; and June palladium added $7.50, to $2,275 an ounce.