Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold slipped 0.2% in choppy trade to close at a five-month low under $1,222 as the dollar and bond yields soared, reducing demand for alternative stores of value. The metal rebounded from an intraday low of $1,211 and rose as high $1,231 as bargain hunters re-entered the market after last week's 6.2% sell�off.

The dollar jumped another 1% against major rivals, reaching the highest level in 12 months, as markets scramble in response to Donald Trump's surprise election as U.S. president. Expectations that Trump and the Republican-controlled Congress will launch a huge infrastructure stimulus program along with protectionist trade policies has radically shifted inflation expectations to the upside.

Traders speculate that rapidly rising inflation may trigger more aggressive rate hikes from the Fed, further boosting the dollar. CME Fedwatch now sees an 86% chance of a quarter-point hike in December, followed by a 36% chance for a second hike in June. A stronger dollar weighs on gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

Treasury prices tumbled for a fifth session, pushing yields to the highest levels since January, as bond markets also reprice inflation expectations.

While higher inflation may pressure gold in the short term, it is likely to prove bullish in the longer term as investors seek out inflation hedges to protect purchasing power.

The other precious metals were mostly lower, with silver and platinum dropping 2.8% and 1%, respectively, while palladium, more directly tied to industry, rose 1.9%.

At the Comex close: December gold futures slipped $2.60 to $1,221.70; December silver fell 49 cents to $16.89; January platinum dropped $9.60 to $933.60; December palladium added $13 to $697.70 an ounce.