Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 1.9% to close just above $1,331 as the dollar and bond yields rose, diminishing demand for alternative stores of value. It was the metal's biggest one-day decline in 14 months.

The dollar jumped 0.6% against major rivals, partially rebounding from last week's 1.4% dive as traders speculated that the expansionary policies of the Trump Administration may fuel inflation and push the Fed to accelerate rate hikes. A stronger dollar pressures gold and other commodities by making them more expensive in other currencies.

Tax cuts and the budget deal passed recently by Congress, which increases spending by $300 billion, are expected to spur an already-energetic economy nearing full employment. With inflation gathering momentum, as evident in January's 0.5% jump in the CPI, the additional stimulus has the potential push prices for retail and wholesale goods higher quickly.

Also supporting the dollar, yields on Treasury bonds rallied with the rising inflation expectations and the growing national debt, which surpassed $20 trillion this month and is projected to rise further with tax cuts and budget deficits. Short-term yields (on bonds under three years) rose to the highest levels since 2008. As the Treasury readies additional bond sales to fund the new fiscal policies, demand for US debt has softened, lowering prices and boosting yields.

The other precious metals also fell, with silver dropping 1.6% while platinum and palladium each 0.8%.

At the Comex close: April gold tumbled $25.10 to $1,331.20; March silver lost 27 cents to $16.44; April platinum slid $8.30 to $1,004; and March palladium shed $8.60 to $1,027.15 an ounce.