Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched down 30 cents to close at $1,905 as upbeat factory data and rising inflation worries lifted Treasury yields and the dollar, pressuring alternative stores of value.

US manufacturing gained momentum in May, according to the ISM index, as the recovery boosted orders for cars, trucks, furniture, appliances, and other factory goods. But widespread shortages of materials and workers held output in check and added to the cost of production.

Benchmark 10-year Treasury yields rebounded to a two-week high on the positive data and growing concern that sharply higher inflation will drive the Fed to raise interest rates. Rising yields are a headwind for gold because they increase the opportunity cost for holding the metal instead of bonds as a safe-haven asset.

Prominent Fed officials continued to push back against inflation worries. Speaking at the Economic Club of New York, Fed Governor Lael Brainard repeated the recent mantra that rising prices are a passing product of pent-up demand. Separately, Vice Chair Randal Quarles told Politico that a April's high monthly inflation reading does not necessarily mean "durable high inflation" is coming.

The dollar also rose after the ISM release, bouncing off five-month lows earlier in the session before slipping back into the red.

Gold's dipped was backstopped by rising oil prices after OPEC and other major produces pledged to raise production very slowly to 2 million barrels per day, supporting the market. WTI crude added 2.1% to $67.72 per barrel, the highest level in two years. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were higher, with silver picking up 0.3% while platinum and palladium gained 1.5% and 1.2%, respectively.

At the Comex close: August gold dipped 30 cents to $1,905; July silver rose 9 cents to $28.10; July platinum gained $17.30 to $1,199.70; and September palladium added $33.10, to $2,863.20 an ounce.