Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rocketed past the psychologically-important $1,800 threshold, rallying 1.8% to close near $1,816, as upbeat data combined with falling yields and a weaker dollar to stoke demand for alternative stores of value. It was the metal's highest finish in 12 weeks.

First-time applications for unemployment benefits fell below 500,000 last week for the first time since the pandemic began, reflecting a resurgence in hiring behind accelerating vaccinations and the widespread lifting of regional restrictions.

With the economy building momentum, US nonfarm productivity rose at an annual rate of 5.4% in the first quarter after declining sharply in Q4 of last year. At the same time, unit labor costs increased 5.6% as workers received higher wages for more hours worked.

Wall Street cheered the data, with Dow and S&P 500 jumping nearly 1% each while the Nasdaq added 0.4%.

Despite the rising risk sentiment, benchmark 10-year Treasury yields declined to under 1.57% as bond traders become increasingly convinced that the Federal Reserve has no plans to raise interest rates or taper quantitative easing anytime soon. Falling yields support gold by decreasing the opportunity cost of holding it instead of bonds.

Yields spiked higher earlier this year, pressuring gold, after traders convinced themselves that rising inflation would push the Fed to tighten monetary policy. In recent weeks, a long line of FOMC members have come forward to refute that notion, emphasizing the Fed's intention of letting inflation run high for a sustained period to achieve full employment.

Rising inflation and low bond yields are the ideal environment for gold, which is sought as protection against loss of purchasing power and over-valued equities.

The dollar fell 0.4% against major rivals on rising risk appetite, further supporting gold and other commodities by making them less expensive in other currencies, lifting overseas demand.

The other precious metals were mostly higher, with silver leaping 3.8% and platinum 2.3% while palladium slipped 0.9%.

At the Comex close: June gold gained $31.40 to $1,815.70; July silver climbed 96 cents to $27.48; July platinum picked up $28.80 to $1,257.60; and June palladium dropped $25.40 to $2,947.40 an ounce.