Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold added 0.2% to close above $1,859 as downbeat US economic data and upbeat news about fiscal stimulus lifted demand for alternative assets. The metal extended its gains to $1,866 in electronic trade after the Fed left interest rates and quantitative easing unchanged at its meeting on monetary policy.

With the resurgence of COVID-19 creating headwinds for recovery, retail sales fell 1.1% in November, with the greatest declines coming from restaurants, gas stations, department stores, electronics retailers, and car dealerships. It was the second straight month of declines and the biggest since the pandemic began.

Separately, IHS Markit's flash PMI surveys for both the manufacturing and services sectors weakened this month, with executives identifying the record spike in cases as the cause of the fall off.

Meanwhile, the US death toll from the dread virus passed 300,000, while more than 200,000 new infections were recorded in a one day.

But help is on the way. Initial shipments of Pfizer's vaccine are already being received around the country. Moderna's version, which does not need to be kept nearly as cold, is expected to received authorization from the FDA this week and begin shipping soon thereafter.

And Congress appears to be closing in on a much-needed stimulus bill. Bi-partisan negotiators are nearing agreement on a $900 billion package that will reportedly include checks of $600 or $700, along with extended benefits for the unemployed. Voting is expected to begin this week.

At the end of its two-day policy meeting, the Federal Reserve left interest rates near zero and underscored its intention to use all its tools to support the economy. Notably, the Fed said it will "continue to purchase bonds until reaching targets on unemployment," setting a distant target for the duration of quantitative easing.

While the Fed's statement was extremely dovish, traders hoping for an increase in the size of bond purchases were initially disappointed, pushing gold as low as $1,848 in electronic trade. But once the statement was digested, gold promptly surged back above $1,866, extending the session's gains.

Monetary easing and fiscal stimulus flood the economy with cash, increasing the risk of long-term inflation and stoking demand for gold as an inflation hedge.

The other precious metals were mixed, with silver and palladium rise 1.7% and 1% while platinum slipped 0.4%.

At the Comex close: February gold gained $3.80 to $1,859.10; March silver rose 41 cents to $25.05; January platinum slipped $3.90 to $1,035.40; and March palladium climbed $24.40 to $2,348.20 an ounce.