Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped 0.7% to close near $1,289 as weak details in an otherwise strong Q1 GDP report increased the odds of a rate cut this year, weakening the dollar and boosting demand for alternative stores of value. The metal finished the week with a gain of 1%.

The US economy grew at a robust rate of 3.2% during the first quarter, handily beating forecasts and surpassing the 2.2% increase in Q4 GDP. But beneath that encouraging headline number, details of the government's report are leading investors to question whether this level of growth is sustainable for the rest of the year.

State and local spending jumped to the highest level in three years during Q1, fueled in part by the federal government shutdown in January, which is unlikely to be repeated. The value of inventories, considered a transitory addition to GDP, surged during the quarter. And growth received a boost from trade, which is projected to slow globally in coming quarters.

The core Personal Consumption Expenditure (PCE) Index, the Fed's preferred inflation measure, which strips out volatile food and energy prices, increased by 1.7% in the quarter, down from 1.9% in Q4 2018 and well-below the Fed's target 2%.

The dollar fell 0.2% against major rivals as traders speculated that the soft GDP details and falling inflation may result in a rate cut by the Federal Reserve later this year. CME FedWatch calculated the odds of a cut at more than 60% by December, down from under 40% a week ago.

Lower interest rates tend to weaken the dollar by discouraging foreign exchange investment seeking higher yield, boosting gold in turn by making it less expensive overseas.

The other precious metals were higher for the day and mixed for the week. Silver added 0.9% today for a weekly rise of 0.3%. Platinum rose 1.6% today but dipped 10 cents this week. Palladium climbed 2.9% on the day and 3.5% on the week.

At the Comex close: June gold gained $9.10 to $1,288.80; May silver added 13 cents, to $15.01; July platinum rose $13.90 to $903.60; and June palladium jumped $40.30 to $1,447.20 an ounce.