Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose for a tenth day, adding another 0.2% to close near $1,322 as the dollar retreated again and oil pushed to a three-year high, boosting demand for alternative stores of value. Palladium surged 1.1% to the highest level on record.

The dollar dropped 0.3% against major rivals as the euro rallied to a three-year high behind solid PMI data for the Eurozone. A falling dollar boost gold and other commodities by making them cheaper overseas.

Yesterday, the buck bounced slightly from a five-day slide after the minutes from the Fed's December meeting showed some support for four rate-hikes in 2018. But that bump faded quickly as the market discounted the likelihood of three hikes, let alone four. CME FedWatch puts the odds of three rate hikes at 32% through December, with four hikes at just 12%.

Oil rose 0.5% to a new three-year high on a bigger-than-expected drop in US crude inventories and worries about civil unrest in Iran, OPEC's third-largest producer. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Gold's 10-day rally is the longest since 2004, and it is being underpinned by soaring prices for all commodities, not just oil. The strongest global manufacturing activity since the financial crisis in 2008 has drained commodity surpluses, driving the Bloomberg Commodities Spot Index to a three-year high this week.

Global producer prices are rising as the world economy is set to enjoy its best year since 2011. Higher consumer inflation is expected as rising prices for raw materials filter into products and services. Historically, gold thrives during periods of sharply rising inflation as investors seek out long-term stores of value.

The other precious metals were mostly higher. Silver was flat while platinum picked up 0.8%. Palladium, meanwhile, jumped 1.1% to a record high near $1,100 as strong global growth is driving the need for auto catalytic converters, which account for three-quarters of demand for palladium.

At the Comex close: February gold added $3.10, $1,321.60; March silver was unchanged at $17.27; April platinum rose $7.90 to $970.20; and March palladium jumped $11.40 to $1,094.75 an ounce.