Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGaining for a third straight session, gold added another 0.2% to finish near $1,798 as rising producer prices and falling yields lifted demand for alternative stores of value. The metal popped above $1,800 during intraday trading before settling back to its highest close in a month.

The produce price index added 0.5% in September, slightly below forecasts. It was the smallest monthly rise since last December but still marked the nine consecutive month of higher wholesale prices, adding to expectations that inflation will remain stubbornly elevated for quite some time.

Counterintuitively, benchmark 10-year Treasury yields declined on the PPI print, slipping below 1.52% as investors flocked to the safety of government bonds. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Sharply higher inflation typically drives yields upward as traders demand higher returns for tying up cash that will have eroding future value. But in the current environment of looming stagflation, bond traders seem worried that the Fed could fight inflation by tightening too soon or too much, snuffing out precarious economic growth.

Despite those concerns, Wall Street jumped across the board, lifted by upbeat earnings in the financial sector. All three major US indexes climber more than 1.6%.

The dollar slipped slightly against major rivals on the uptick in risk appetite, helping gold and other commodities by making them less expensive in other currencies.

Gold also got a boost for higher oil prices, with WTI crude adding 1.1% to reach more than $81.50 per barrel. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also higher, with silver climbing 1.3% while platinum and palladium picked up 2.7% and 2.1%, respectively.

December gold added $3.20, to $1,797.90; December silver rose 31 cents to $23.48; January platinum gained $28.10 to $1,052.30; and December palladium climbed $44.80 to $2,150.90 an ounce.