Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.2% to close at a six-week low under $1,830 as net-negative economic data and a new stimulus proposal lifted the dollar, undermining demand for alternative stores of value. The metal ended the week down 0.3%.

US retail sales sank for the third straight month, dropping 0.7% as surging COVID-19 cases battered the economy. Sharp declines among internet retailers, big-box stores, bars, and restaurants led the way while auto dealers rose 2%.

Separately, consumer sentiment also fell in December, according to the University of Michigan index, because of pandemic worries and rising layoffs.

On the plus side, US industrial production surged 1.6% last month, the biggest gain since last July. Manufacturing has been a bright spot in the struggling economy, rising for eight straight months but remaining around 3% lower than pre-pandemic.

President-elect Joe Biden unveiled a $1.9 trillion stimulus package yesterday including $1,400 checks to individuals, increased unemployment benefits, and substantial funding for vaccine distribution and testing. It also brings much-need money to strapped state and local governments.

Despite the proposal for additional aid, risk appetite receded in the face of the deepening pandemic. All three major US equity indexes were down, with the Dow and S&P 500 dropping 0.6% and 0.7%, respectively, while the Nasdaq lost 0.9%.

The dollar gained 0.6% against major rivals on flights to safety, pressuring gold and other commodities priced in it for global trade. The weak US data also pushed Treasury yields lower.

Gold is being pulled in two directions. Expectations of higher long-term inflation because of monetary easing and fiscal stimulus are propelling demand for the metal in its traditional role as inflation hedge. But in the short-term, the huge outlays of government spending are causing currency traders to speculate that easing might taper sooner, which would lift the dollar.

The other precious metals were lower for the day and higher for the week. Silver lost 3.6% today but held on to a weekly rise of 0.9%. Platinum dropped 3.2% on the day but rose 1.7% on the week. Palladium posted a daily decline of 1.2% and a weekly rise of 1.3%.

At the Comex close: February gold fell $21.50 to $1,829.90; March dropped 94 cents to $24.87; April platinum declined $36.50 to $1,089.90; and March palladium slid $28.20 to $2,395.10 an ounce.