Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged down 0.1% to just above $1,990 despite slight downticks in yields and the dollar as markets continued to consider the ramifications of yesterday’s hotter-than-expected consumer price report.

The CPI for January rose 3.1% year-over-year in January, slightly hotter than consensus forecasts of 2.9%, prompting a selloff in stocks and bonds as investors realized that the Fed is unlikely to cut interest rates in May.

Gold was swept under $2,000 an ounce in the selloff, closing yesterday at the lowest level in two months because of sharply higher Treasury yields and the strongest dollar in three months. Yields and the dollar both ticked a bit lower today, consolidating those gains, while sentiment for gold stayed weak.

A pair of Fed officials tried to mitigate renewed concern about inflation today. Chicago Fed President Austan Goolsbee said even a few months of higher inflation “would still be consistent with our path” back to the Fed’s 2% target.

Fed Vice Chair for Supervision Michael Barr echoed that sentiment, the Fed is “confident we’re on a path to 2% inflation,” although it may be “a bumpy one.”

The odds of a May rate cut rose slightly to 37%, up from 32% yesterday. But June remains the new consensus for the policy pivot, with a likelihood of 54%, according to CMS FedWatch.

Tomorrow’s release of January retail sales data should offer a little more clarity on economic trends. Retail sales comprise around 40% of consumer spending, which in turn accounts for nearly 70% of GDP.

The other precious were higher, with silver adding 1% while platinum and palladium rose 2.1% and 8.7%, respectively.

At the New York spot close: gold dipped $2.60 to $1,990.30; silver climbed 23 cents to $22.39; platinum rose $118.40 to $897.30; and palladium rebounded by $74.50 to $935 an ounce.