Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged down 0.2% to close at $1,907 after two prominent Fed officials advocated staying aggressive with rate hikes despite several months of softer inflation data. The metal had risen to a high near $1,930 on another round of weak US economic reports before pulling back on the hawkish Fed talk.

US wholesale prices fell 0.5% in December, far more than forecast, led by cheaper food and gasoline. It was the biggest decline since April 2020 and more evidence that inflation is waning. The soft PPI data follows last week's CPI report showing consumer inflation falling in December for the first monthly decrease since 2020.

Adding to deflationary pressure, retail sales tumbled 1.1% last month for the biggest decline in a year. Meanwhile, the November print was revised to show sales falling 1% rather than the 0.6% originally reported.

And finally, the Fed reported that US industrial output dropped 0.7% in December for the biggest monthly decline since September 2021.

Benchmark 10-year Treasury yields fell under 3.4% as investors, fearful of a possible recession, sought refuge in the perceived safety of government bonds. Gold also benefited from flights to safety, rising to $1,929.80 early in the session.

But hawkish comments from two regional Fed presidents prompted traders to take profits from the early-session gains. President James Bullard St. Louis Fed said the Fed "should not stall" in raising rates above 5% as quickly as possible, sentiments echoed separately by President Loretta Mester of the Cleveland Fed.

The dollar tumbled on the weak data, only to recoup its losses later in the session on the Fed talk and news that the Bank of Japan will maintain its ultra-loose monetary policy.

The other precious metals were also lower' with silver falling 1.8% while platinum and palladium lost 0.3% and 1.6%, respectively.

At the Comex close: February gold dipped $2.90 to $1,907; March silver slid 42 cents to $23.65; April platinum slipped $3.20 to $1,043.70; and March palladium shed $28 to $1,706 an ounce.