Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.6%, its biggest one-day jump since March, to close at a three-week high above $1,213 after Fed Chair Jerome Powell's suggestion that interest rates are approaching neutral pressured the dollar, boosting demand for alternative stores of value. The metal ended the week with a gain of 2.5%.

Speaking at the annual central bankers' summit at Jackson Hole, WY, Powell defended the Fed's path of gradual rate hikes, saying the US economy is strong and inflation is near the 2% target. But importantly, he also signaled the approach of the so-called neutral federal funds rate, the point at which interest rates neither stimulate nor constrain growth. At the neutral rate, the Fed would pause its path of rate increases.

The dollar fell 0.5% on Powell's statements as traders speculated that the end of rate hikes may be coming sooner than expected. Higher interest rates support the dollar by attracting foreign exchange investment seeking higher yield. In turn, a stronger dollar pressures gold and other commodities by making them more expensive overseas. The end of rate hikes would eliminate a major source of price-pressure on gold over the past 18 months.

For the week, the buck lost around 1% to notch its worst weekly performance since February. Comments by President Trump, critical of Jerome Powell and rising interest rates, pressured the currency to start the week. Then the midweek release of dovish Fed minutes from the August FOMC meeting, in which the central bankers cited trade conflicts as a serious downside risk and stopped calling current monetary policy "accommodative," furthered its slide.

The other precious metals were sharply higher for the day and week. Silver jumped 1.7% today for a weekly gain of 1.1%. Platinum rose 1.4% on the day and 1.6% on the week. Palladium climbed 1.9% to close the week 5.8% higher.

At the Comex close: December gold surged $19.30 to $1,213.30; September silver jumped 25 cents to $14.79; October platinum added $11, to $789.40; and September palladium climbed $17.40 to $928.60 an ounce.