Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold gained 0.8% to close at a 16-month high above $1,298 after a dovish shift by the Federal Reserve continued to weigh on the dollar, boosting demand for alternative store of value. The metal reached as high as $1,319, a two-year high, before falling back on profit-taking and Brexit confusion.

Meeting this week, the FOMC kept rates unchanged and issued a statement advocating a slower approach to tightening monetary policy in the near future. Expressing concern about weak U.S. business investment and "vulnerabilities in the global economy" during her post-meeting press conference, Fed Chair Janet Yellen effectively pushed the horizon for the next rate hike out until after the summer, saying the Fed's "cautious approach to policy remains appropriate.�

Following Yellen's statement yesterday, gold immediately jumped while the dollar fell. Lower rates weigh on the buck by discouraging forex inflows searching for higher yields; a lower dollar supports gold and other commodities by making them less expensive overseas.

The metal extended those gains today, surging to a two-year high near $1,319 in intraday trading before falling back under $1.300 on news that British MP Jo Cox died from gunshot wounds, prompting the suspension of campaigning around the pending Brexit vote. An anti-Brexit lawmaker, Cox was apparently attacked by a pro-Brexit partisan. Worries over the potential of Britain's exit from the EU to disrupt global financial market have supported safe-haven demand for gold and government bonds.

Outside of sharply higher rents and gasoline prices, consumer inflation was broadly muted in May, further easing pressure on the Fed to raise interest rates. The CPI has risen only 1% over the past 12 months, well-under the Fed's 2% target. In a separate report, U.S. exports fell sharply in the first quarter as the current account deficit reached a seven-year high.

The other precious also finished higher, with silver rising 0.6% while platinum and palladium and 0.4% and 0.5%, respectively.

At the Comex close: August gold gained $10.10 to $1,298.40; July silver rose 10 cents to $17.61; July platinum picked up $3.50 to $978.30; and September added $2.40, to $534.95 an ounce.