Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.2% to close under $1,290, its lowest settlement this year, as upbeat data boosted the dollar and Treasury yields, cutting demand for alternative stores of value.

The Philly Fed manufacturing index jumped in May to its highest level in a year as new orders surged to a 45-year high. Following a solid reading for the New York Fed manufacturing index earlier this week, the data raises hopes for a turnaround in the ISM national index, which slipped last month.

Separately, the Conference Board said its index of leading economic indicators rose 0.4% in April, matching an upwardly-revised reading for March. The index has not fallen monthly in two years.

Yields on benchmark 10-year Treasury notes rose to a seven-year high above 3.11%. Upbeat economic reports are causing investors to anticipate sharply higher inflation, which reduces the value of fixed-income payments from bonds and spurs bondholders to sell, boosting yields.

The dollar rose 0.2%, with the ICE Dollar Index hovering new a 2018 high, as trader speculate that improving economic conditions and higher inflation may result in more aggressive rate hikes from the Fed. Weakness in the euro also supported the dollar as an anti-EU coalition government gains power in Italy, raising questions about its ongoing membership in the union.

Despite the dollar's surge over the past month, many analysts doubt its ability to break from its secular bear market for long. The exploding "twin deficits" — the federal budget deficit and current account deficit — are expected to create major headwinds for the economy and the buck as the government must borrow deeply to make ends meet.

The other precious metals were mixed, with silver and platinum adding 0.7% and 0.3%, respectively, while palladium dropped 0.5%.

At the Comex close: June gold dipped $2.10 to $1,289.40; July silver picked up 11 cents, to $16.48; July platinum rose$2.30 to $892.10; and June palladium dropped $5 to $977.50 an ounce.