Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped another 0.3% to close at a five-week low under $1,752 as the dollar and Treasury yields continued to climb on the prospect of reduced monetary stimulus from the Fed. The metal suffered its third straight weekly decline, dropping 2.3% for the week.

Following a spate of positive economic reports this week, capped by data showing US retail sales jumping unexpectedly in August, the markets now expect the Fed to begin tapering monetary stimulus by the end of the year. More than 60% of economists surveyed by Reuters expect reductions to begin in December.

By tapering its $120 billion per-month bond-buying program, sometimes called quantitative easing, the Fed effectively reduces the number of dollars it releases into circulation. The end of QE is considered a prerequisite to raising interest rates.

Whether the Fed announces any change in direction at its meeting next week is anyone's guess. But traders are already positioning for this first, small step toward policy normalization, and the shift in sentiment is having a bullish effect on the dollar to the detriment of gold.

Extending yesterday's 0.5% rise, the dollar added another 0.3% against major rivals to reach a fresh three-week high. A stronger dollar tends to pressure gold and other commodities priced in it for global trade by making them more expensive overseas.

Benchmark 10-year Treasury yields also crept higher on the taper view, creating a further headwind for gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

US consumer sentiment edged up slightly in September, according to the University of Michigan survey, but remained near a 10-year low as Americans fret about higher inflation and the spread of the Delta variant.

The other precious metals were mixed for the day but lower for the week. Silver fell another 2% for a weekly loss of 6.5%. Platinum rose 0.8% but still lost 2.7% on the week. Palladium dropped 1.9% today and 6.7% this week.

At the Comex close: December gold slid $5.30 to $1,751.40; December silver dropped 46 cents to $22.34; October platinum picked up $7.30 to $930.60; and December palladium fell $37.70 to $1,983.80 an ounce.