Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.4% to close above $2,006 as Israel stepped up its ground assault on Gaza over the weekend, boosting demand for safe-haven assets. It was the metal’s highest finish in three months.

Israeli ground troops penetrated deeply into Gaza amidst increased bombardment with PM Netanyahu announcing that the “second phase” of a protracted war has begun. Combined infantry, armor, and engineering forces are now inside Gaza’s borders, with tanks and soldiers holding positions on the outskirts of Gaza City.

The aggressive action, waged in retribution for the brutal incursion by Hamas into Israel, has substantially increased to potential for a wider conflict in the Middle East.

Gold is receiving safety bids despite factors that would otherwise serve as headwinds, such as rising Treasury yields, rallying equities, and a falling oil price.

Benchmark 10-year Treasury yields climbed near 4.9% after the Treasury announced Q4 financing needs of $776 billion. While the figure was less than forecast, and much less than the $1.1 trillion borrowed in Q3, it nonetheless points to the dramatic increase in debt service expense resulting from sky high deficits and higher interest rates.

Also buoying yields, the Bank of Japan is expected to hold interest rates unchanged but may tweak its yields curve to lift 10-year bonds to 1%, which would lend upward pressure to US yields.

The Fed will almost certainly leave rates unchanged. But hawkish language from Fed Chair Powell in his post-meeting comments could increase the odds of a December increase, which currently stand at about 25%.

The dollar fell 0.4% against major rivals led by the yen, supporting gold and other commodities by making them less expensive overseas.

All three major US equity indexes jumped more than 1% as Q3 earnings have surprised to the upside. On aggregate, earnings for S&P 500 companies grew 4.3%, nearly tripling the 1.6% seen a month ago.

Oil prices fell more than 3% on relief that Israel’s ground assault into Gaza did not immediately affect supplies from the region.

The other precious metals were also higher, with silver surging 2.2%, platinum rising 3.8%, and palladium adding 0.7%.

At the Comex close: December gold gained $7.10; December silver jumped 51 cents to $23.40; January platinum picked up $34.10 to $939.90; and December palladium added $8.10, to $1,138.30 an ounce.