Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to retake the psychologically important $1,800 level as soft US data and dovish Fed-speak weakened the dollar, lifting alternative stores of value. It was the metal's second straight winning session.

The ISM barometer of US manufacturing dropped to a 14-month low in January as the omicron tsunami crashed over the country. The index remains reasonably strong at just under 58%, where anything over 50% indicates expansion. But it has fallen for three straight months as new orders and production have pulled back.

The slowdown is expected to go beyond US factories. IHS Markit, a top Wall Street forecaster, expects GDP to grow at less than 2% in the first quarter, constrained by omicron and tumbling consumer sentiment. Yesterday, the Atlanta Fed released projected real GDP growth, beyond inflation, at merely 0.1% for Q1.

With the Fed set to raise interest rates starting in March, the markets have speculated that the central bank might start with a half-point hike and follow with five of a quarter-point, or more, this year. But a growing number of regional Fed officials have pushed back on these expectations in recent days.

Yesterday, Mary Daly of the San Francisco Fed said the central bank will want to see economic data before deciding on additional tightening. The Richmond Fed's Thomas Barkin said the pace of hikes after March depends on inflation. And the Atlanta Fed's Raphael Bostic warned that the Fed is "not set on any particular trajectory."

Today, Philadelphia Fed President Patrick Harker added to the dovish chorus, saying a half-point move is unlikely, as are more than four quarter-point increases during the year.

The dollar retreated for a second day on the dovish signals, losing another 0.3% against major rivals after tumbling 0.7% yesterday. A weaker dollar boosts gold and other commodities by making them less expensive in other currencies, lifting overseas demand.

The other precious metals were mostly higher, with silver and platinum adding 0.2% and 0.9%, respectively, while palladium slid 0.1%.

At the Comex close: April gold gained $5.10 to $1,801.50; March silver rose 20 cents to $22.60; April platinum picked up $2.40 to $1,023.20; and March palladium dropped $9.30 to $2,346.50 an ounce.