Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rallied another 0.5% to close at a 10-week high above $1,297 as falling bond yields and a weaker dollar boosted alternative assets. The metal has finished higher in nine of the past ten sessions to gain more than $55 per ounce since the Fed raised interest rates on December 13.

US Treasury yields plunged by the most in three months as year-end investors piled into safe havens, and traders rebalanced after the recent sell-off in government bonds. Passage of Trump tax cuts caused a knee-jerk shift out of bonds last week on speculation that the new law would drive faster growth and higher inflation, resulting in additional rate hikes from the Fed. Today's reversal shows that sell-off was overdone.

The dollar fell on the tumble in yields, losing another 0.4% against major rivals to hit a three-month low as traders bet that the tax-cut stimulus may be more muted than previously believed. The buck is now down more than 9% this year, as measured by the ICE dollar index, including a 13% plunge against the euro. A weaker dollar boosts gold and other commodities priced in it for global trade.

Also weighing on the dollar, Commerce Department said the US trade goods deficit increased by 2.3% in November, more than forecast. A wider trade gap reduces GDP growth.

Gold slipped in the run-up to the Fed's December meeting on expectations of higher interest rates. However, it has rallied strongly since, with the Fed's post-meeting statement having signaled a cautious, stay-the-course approach rather than the more hawkish posture that many anticipated. Stubbornly low inflation continues to bedevil the central bankers as they try to normalize monetary policy.

The other precious metals also finished higher, with silver surging 1% while platinum and palladium picked up 0.7% and 0.4%, respectively.

At the Comex close: February gold gained $5.80 to $1,297.20; March silver surged 17 cents to $16.92; April platinum picked up $3.50 to $931.50; and March palladium climbed $7.10 to 1,063 an ounce.