Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.7% to close at a nine-month high above $1,325 after yesterday's surprisingly dovish Fed statement boosted demand for alternative stores of value. The metal gained 3.3% in January to post its fourth straight monthly rise.

As expected, the Federal Reserve held interest rates unchanged yesterday at the conclusion of its meeting on monetary policy. Unexpected was a sharp reversal in the post-meeting statement signaling the likely end rate of ongoing rate increases. Asserting patience before further tightening, the statement eliminated forward guidance pledging "further gradual" rate hikes for the first time since 2015.

Rising uncertainty in the US economic outlook stemming from softer data, slowing global growth, Brexit confusion, and political gridlock in the US has quickly shifted expectations. CME FedWatch, which forecasts rate hikes based on Fed fund futures trading, shows the market pricing-in no rate hikes for 2019, with a 27% chance of a rate cut by December.

Seven US rate hikes over the past two years have been a primary support for the strong dollar, which has kept a lid on gold by making it more expensive in other currencies. The Fed's dovish new outlook should reverse that trend, weakening the dollar and strengthening gold.

The World Gold Council reported annual gold demand rose 4% in 2018, driven by sharply higher purchases by global central banks. Retail investment in physical gold bars and coins rose 4%, while central banks added 651.5 tonnes to their reserves, the most since 1971.

The other precious metals were mixed for the day but higher for the month. Silver rose 0.9% for a monthly increase of 3.3%. Platinum climbed 1% today and 2.7% this month. Palladium fell 1.3% but still ended January 9.1% higher.

At the Comex close: April gold gained $9.70 to $1,325.20; March silver added 15 cents, to $16.07; April platinum rose $8.50 to $824.70; and March palladium fell $16.50 to $1,299.90 an ounce.