Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped less than 0.1% to close at $1,677 after a hot core CPI for September stoked expectations that the Fed will continue to raise interest rates aggressively. But a weaker dollar helped offset the rate pressure in a volatile session, leaving the metal little changed.

Consumer prices rose 0.4% last month and the 12-month rate slipped from 8.3% to 8.2%. But the core CPI jumped 0.6%, more than forecast, to a new 12-month peak of 6.6%, the highest in 40 years. The Fed views the core rate as more accurate because it strips out volatile food and energy costs.

The data reinforced the view that inflation is far from under control, and the Fed will have to continue its aggressive program of interest rates hikes in coming months. A hike of 75 basis points in November is a near-certainty, with a full 1% increase now on the table.

Gold initially fell while the dollar rallied and equities plunged on a knee-jerk reaction to the CPI. But the markets reversed direction by midday as traders realized that nothing much had changed, and the initial responses were excessive.

Still, 10-year Treasury yields edged up above 3.95%, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar fell to a loss of 0.8% late in the session after the euro rallied on signals that the ECB will raise interest rates less than originally thought. The falling dollar helped gold recover by making it less expensive in other currencies, buoying overseas demand.

The other precious metals were mixed, with silver slipping 0.1% while platinum gained 1.8% and palladium dropped 0.9%.

At the Comex close: December gold dipped 50 cents to $1,677; December silver slipped 2 cents to $18.92; January platinum picked up $15.40 to $896.40; and December palladium shed $19.20 to $2,117.20 an ounce.