Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched down 0.1% to close under $1,742 on profit-taking as minutes from the Fed's last meeting reinforced its easy-money stance while yields, the dollar, and stocks all treaded water. The metal had rallied around 3.6% over the previous four sessions on receding Treasury yields.

The minutes from the latest FOMC meeting underscored the central bankers' commitment to keeping the cash spigot wide open. Interest rates will remain near zero through 2023 and quantitative easy will continue at $120 billion per month until the economy achieves full employment and inflation holds above 2% for an extended period.

While "several" members voiced concern about rising inflation, the majority held that structural circumstances would result in "more downward pressure on inflation than expected." The Fed's new framework, unveiled last fall, pledges to allow inflation to remain above 2% for as long as it had been under.

Rising inflation with near-zero interest rates is a bullish scenario for gold because it pushes real yields further into the negative. Negative real yields eliminate the opportunity cost for holding the metal instead of bonds as a long-term store of value and safe-haven asset.

Stocks, the dollar and bond yields all searched for direction, slipping from minor losses to minor gains after the Fed minutes.

The US trade deficit jumped nearly 5% to record high above $71 billion in February, as accelerating vaccinations and stimulus money fueled a quicker recovery at home than abroad.

The other precious metals were mixed, with silver edging up less than 0.1% while platinum and palladium dropped 0.7% and 2.6%, respectively.

At the Comex close: June gold dipped $1.40 to $1,741.60; May silver added 2 cents, to $25.25; July platinum dropped $8.60 to $1,231.90; and June palladium fell $69.10 to $2,621.10 an ounce.