Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.2% to close at $1,678 as economic optimism lifted bond yields, the dollar, and the Dow, pressuring safe-haven assets. It was the metal's lowest close since last April.

The Senate narrowly passed the Biden administration's $1.9 trillion Covid-19 relief package over the weekend, sending it back to the House for a final vote on some small changes. The bill is expected to be signed into law sometime this week.

Coming as vaccinations accelerate and businesses begin to reopen after pandemic closures, the huge outlay in fiscal spending is expected to supercharge an economy that is already gathering momentum. It is also widely expected to stoke sharply higher inflation.

Benchmark 10-year Treasury yields pushed above 1.6% as bond traders, betting that inflationary pressures will erode future returns, demand more payout for trying up money for long periods. Rising bond yields are a headwind for gold because they increase the opportunity cost for hold it instead of bonds as a safe-haven asset.

The dollar tracked higher with yields, rising 0.4% to reach a three-month high against major rivals. A rising dollar also presents headwinds to gold by making it more expensive in other currencies, undermining overseas demand.

Wall Street saw mixed results. The Dow climbing 1.1% on recovery optimism while the tech-heavy Nasdaq retreated 2.3% to enter a technical correction, defined as a 10% drop from a recent top.

Increasingly, as traders speculate that higher inflation will prompt the Fed to raise interest rates sooner than expected, tech stocks are losing favor. Valuations for these high-flying growth stocks are typically based on earnings in the distance future. Rising inflation and higher interest rates erode the value of those future earnings.

The other precious metals were mostly lower, with silver and palladium sliding 0.1% and 0.6%, respectively, while palladium added 2.1%.

At the Comex close: April gold dropped $20.50 to $1,678; May silver dipped 2 cents to $25.27; April platinum rose $24 to $1,152.30; and June palladium fell $14.90 to $2,314.20 an ounce.