Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.5% to close near $1,707 as a weaker dollar, rising oil prices, and expanded easing from the Fed boosted demand for alternative stores of value.

For the first time ever, the Federal Reserve began buying corporate bonds and bond ETFs through its newly formed Secondary Market Corporate Credit Facility. Combined with unlimited amounts quantitative easing though the buying of US Treasury bonds, the new facility will push unprecedented amounts of cash into an economy ravaged by the coronavirus pandemic.

The dollar fell 0.3% against major rivals as traders speculated that yet more stimulus will be forthcoming after the House unveiled a new $3 trillion aid bill. Earlier packages have already provided around $3 trillion for workers and companies.

The Federal government reported a budget deficit of $738 billion in April, the biggest on record, as spending on coronavirus rescue packages began in earnest.

Gold typically thrives under conditions of extreme monetary easing and stimulus because they flood the economy with cheap liquidity, increasing the longer-term risks of currency debasement and inflation. The metal reached its all-time high of $1,921 in 2011 after three limited rounds of quantitative easing were undertaken to lift the economy out of the Great Recession following the global financial crisis.

Sharply higher oil prices also supported the metal. WTI jumped 7.5% to nearly $26 per barrel after Saudi Arabia, Kuwait, and the UAE pledge deeper production cuts than are called for by the recent OPEC+ agreement. Gold often trades in sympathy with oil as a hedge against energy related inflation.

The other precious metals were mostly higher, with silver and palladium rising 0.2% and 0.4%, respectively, while platinum fell 0.5%.

At the Comex close: June gold gained $8.80 to $1,706.80; July silver picked up 3 cents to $15.71; July platinum slid $3.90 to $777.40; and June palladium rose $7.20 to $1,835.40 an ounce.