Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold eased 0.4% to close under $1,819 on profit-taking ahead of the conclusion of the Fed's meeting on monetary policy. The metal then slipped under $1,814 in electronic trading on some hawkish Fed messaging before rebounding back above $1,818 on safe-haven inflows.

The Fed increased interest rates by 50 basis points to reach a top range of 4.5%, the highest since 2007. This hike was widely expected and already priced into the market.

In the accompanying policy statement, the central bankers surprised to the hawkish side, projecting a top end for the benchmark rate at 5.25%, up from 4.75% in September. The markets were hoping for a lower terminal rate, given a slowing economy and cooler inflation.

Bond yields turned mostly higher after the hike and policy statement, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

But as the markets dug further into the statement and heard Fed Chair Powell's press conference, both trades reversed. Benchmark 10-year Treasury yields fell back under 3.5% and gold rose back above $1,818, recouping its post-announcement losses, as investors flocked to safety.

The Fed now sees the economy slowing to a crawl in 2023, growing just 0.5%, with several members forecasting a recession for the first time. The central bankers project unemployment rising to 4.6%, up from its current 3.7%, as higher rates take effect.

The dollar also swung from gains losses, helping gold recover by making it cheaper in other currencies.

The other precious metals were mixed, with silver adding 0.6% while platinum dipped less than 0.1% and palladium slipped 0.8%.

At the Comex close: February gold eased $6.80 to $1,818.70; March silver picked up 15 cents to $24.14; January platinum dipped 20 cents to $1,038.70; and March palladium dropped $14.60 to $1,922.10 an ounce.