Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold added 0.5% to close near $1,768 as higher oil prices and renewed trade tensions with China spurred demand for inflation hedges and safe-haven assets. It was the metal's third straight winning session.

Oil prices surged again, with WTI crude adding another 2.3% to a seven-year high above $77.60 per barrel, after OPEC and its allies decided against raising production further at a meeting this week.

Global crude stockpiles have fallen 6% below normal this summer because of rising demand and lower OPEC+ production, leading to sharply higher prices. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Along with problems in the global supply chain, rising energy costs are a key driver of rapidly escalating inflation both in the US and abroad. The US personal consumption expenditure price index (PCE) rose 0.4% in August, pushing the 12-month rate to 4.3%, the highest level since 1991. Eurozone inflation surged to a 13-year high last month, also on supply problems and energy costs.

The Biden administration outlined an aggressive trade policy with China, saying it has failed to live up to previous agreements and continues to engage in unfair trade practices. China has achieved less than 70% of the import target set by the Phase One agreement negotiated last year, and continues heavy subsidies to targeted industries to the disadvantage of US firms.

Tariffs set by the Trump administration will remain in effect, with additional duties expected on key emerging technologies like 5G, batteries, and electric vehicles.

In the meantime, China escalated tensions with US ally Taiwan by sending a record number of military aircraft into its airspace as a show of regional hegemony.

Wall Street sold off on trade tensions and inflation worries, with the Dow and S&P 500 dropping 1.1% and 1.5%, respectively. The tech-heavy Nasdaq was hit harder, plunging 2.4% as investors rotated away from inflation-sensitive inflation stocks.

The dollar dropped more than 0.2% against major rivals as Forex traders weighed the impact of inflation and China tensions on the US recovery. A weaker dollar typically supports gold and other commodities by making them less expensive in other currencies, lifting overseas demand.

The other precious metals were mixed, with silver picking up 0.5% while platinum and palladium, more directly tied to industry, lost 1.3% and 1.5%, respectively.

At the Comex close: December gold gained $9.20 to $1,767.60; December silver 11 cents, to $22.64; January platinum dropped $12 to $961.10; and December palladium lost $28.70 to $1,875 an ounce.