Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.2% to close under $1,763 as rising risk appetite and hawkish comments from members of the Federal Reserve pressured alternative assets. It was the metal's lowest finish in seven weeks.

Looking past the omicron covid variant, at least for now, bargain-hunters swept back into US equities markets, lifting the Dow by 2% and the S&P 500 1.5% while the Nasdaq added 0.5%. All three indexed saw steep declines on Wednesday after the first US case was discovered in California.

News that a second case had been reported in Minnesota, but with only mild symptoms, helped to alleviate worries that the new strain will derail the economy, stoking risk appetite and weighing on safe havens.

Hawkish taper talk from Fed members also punished gold. Atlantic Fed President Raphael Bostic said the central bank should end the Fed's bond-buying program, known as quantitative easing, sooner than planned so it can raise interest rates to combat inflation.

Separately, Mary Daley of the San Francisco Fed said two rate hikes are likely to appear on the new Fed "dot-plot," to be released in two weeks. The dot-plot lays out the rate expectations of each Fed member. The last release, in September, showed only one hike in 2022.

Higher interest rates create headwinds for gold in two ways. First, they typically lift the dollar against other currencies as Forex traders flock to its higher yields. A stronger dollar makes gold pricier in other currencies, limiting overseas demand. Second, higher rates lift bond yields and increase the opportunity cost for holding gold instead of bonds as a safe-haven asset.

The other precious metals were mostly lower, with silver and platinum slipping 0.1% and 0.2%, respectively, while palladium rose 1%.

At the Comex close: February gold fell $21.60 to $1,762.70; March silver dipped 2 cents to $22.32; January platinum slipped $2.10 to $933.10; and March palladium picked up $17.90 to $1,771.40 an ounce.