Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold added 0.4% to close above $1,945 despite higher yields and a stronger dollar as investors sought protection from inflation, the Ukraine war, and an increasingly aggressive Federal Reserve. The metal ended the week 1.3% higher.

With the Consumer Price Index running at a 40-year high of 7.9% through February, the markets are bracing for consumer inflation to push well above 8% when the March report is released next week.

Shortages of wheat, corn, energy, and raw materials resulting from Russia's war on Ukraine and the ensuing sanctions promise to push the cost of living even higher in coming months.

Gold is often sought as a hedge against loss of purchasing power due to rapidly rising prices.

Long criticized for looking the other way as inflation rocketed to generational highs, Fed officials have become increasingly hawkish in public comments this week. Almost all are now calling for a succession 50-basis-point hikes in upcoming meetings while slashing the Fed's balance sheet by $95 billion per month, the fastest pace in history.

Benchmark 10-year Treasury yields climbed briefly above 2.7% today for the first time in three years as bond traders priced-in the prospect of both sharply higher inflation and the belated monetary tightening to control it.

Rising yields typically weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset. But gold is rising anyway, in part because investors are fearful that an over-reaction by the Fed could snuff growth and tip the economy toward recession.

The US dollar index climbed 1.3% this week and briefly eclipsed 100 for the first time in two years, fueled by the hawkish rate outlook and flights to safety because of the Ukraine war.

A rising dollar typically weighs on gold by making it pricier overseas. But like the dollar, gold is also viewed as a currency of last resort during periods of geological, enabling it to rise alongside the buck this week.

The other precious metals were higher for the day and mixed for the week. Silver climbed 1% to post a weekly rise of 0.7%. Platinum added 1.8% today but lost 1.2% this week. Palladium surged 8.9% today for a weekly gain of 6.7%.

At the Comex close: June gold gained $7.80 to $1,945.60; May silver added 9 cents, to $24.82; July platinum picked up $7.60 to $976.80; and June palladium leapt $197 to $2,420.10 an ounce.