Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.2% to close at $1,883 after slightly hotter-than-expected consumer inflation lifted yields and the dollar, pressuring alternative stores of value. It was the metal’s first down session in five.

The Consumer Price Index rose 0.4% in September, a bit more than the 0.3% forecast but well under August’s 0.6% gain. The annual inflation rate remained unchanged at 3.7%. Almost all the monthly increase came from higher costs for shelter and gasoline.

More closely watched by the Fed, the core CPI rose a more modest 0.3% for the second straight month, in line with forecasts. The annual core rate fell to 4.1% from 4.3% in August, suggesting that inflation continues to ebb despite the stubborn headline CPI number.

Separately, first-time jobless claims remained unchanged at 209,000 last week, hovering near historic lows and signaling that the labor market remains robust.

Benchmark 10-year Treasury yields jumped back above 4.7% as investors speculated that the hotter-than-expected CPI print could increase the chances of another rate hike this year. Fed fund futures traders now see a 31% chance of a quarter-point increase in December, up from 26% yesterday.

Higher yields weigh on gold by increasing opportunity cost for holding it instead of yields as a safe-haven asset. But the fact that gold held most of its 2.9% rally from the previous four sessions shows solid underlying demand, in part because of flights to safety arising from the conflict in the Middle East.

Tracking higher with yields, the dollar added 0.6% against major rivals. A stronger dollar adds to headwinds for gold and other commodities by making them more expensive in other currencies, limiting overseas demand.

The other precious metals were also lower, with silver siding 0.8% while platinum and palladium each fell 1.9%.

At the Comex close: December gold dipped $4.30 to $1,883; December silver slid 17 cents to $21.96; January platinum shed $17.20 to $875.80; and December palladium lost $22.80 to $1,147.50 an ounce.