Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dropped 0.5% to close under $1,714 as a potential breakthrough in the treatment of COVID-19 stoked risk appetite, undercutting demand for safe havens. The metal then rebounded above $1,733 in electronic trade after the Federal Reserve pledged to do whatever it takes to support the economy.

Gilead Sciences announced that remdesivir, developed to treat Ebola and SARS, has succeeded in preliminary trials on coronavirus and will proceed to the next stage of testing. The drug reduced hospital time and mortality rates among patients who took it.

Wall Street leapt on the hope that a coming treatment might pave the way to normalized commerce. The Dow rallied 2.2% while the S&P 500 rose 2.7% and Nasdaq soared 3.6%. Adding to risk-on sentiment, several states are starting to ease shelter-in-place restrictions, allowing some businesses to reopen.

Traders largely shook off government data showing the US economy contracted by 4.8% during the first quarter, the most since the financial crisis in 2008. Projections for the second quarter suggest GDP is likely to fall by 25% or more. Before the coronavirus caused widespread shutdowns in March, the economy had been expanding at 2%.

After the Comex close, the Fed released its post-meeting statement on monetary policy. While keeping interest rates unchanged at near-zero, the central bank nonetheless emphasized that it is "committed to using its full range of tools to support the US economy."

Gold rallied sharply in electronic trading after the Fed's statement, pushing as high as $1,733.50 on speculation that more monetary easing will ultimately weaken the dollar and increase the risk of long-term inflation. The metal spiked to its all-time high above $1,900 in 2011 after three rounds of limited quantitative easing.

The other precious metals were mixed, with silver edging down less than 0.1% while platinum and palladium rose 0.5% and 2.1%, respectively.

At the Comex close: June gold dropped $8.80 to $1,713.40; July silver lost a penny to $15.32; July platinum added $4, to $799.60; and June palladium rose $38.70 to $1,917.40 an ounce.