Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold eased 0.2% to close under $1,975 as the dollar rose on rising bets that the Fed may not pause rate hikes in June, pressuring alternative stores of value. But the metal rebounded off intraday lows under $1,956 on safe-haven inflows after debt-ceiling talks stalled again.

Yesterday, St. Louis Fed President James Bullard called for two more quarter-point hikes this year while Neel Kashkari of the Minneapolis Fed said the benchmark rate may have to go "north of 6%" from its current range between 5% and 5.25% to get inflation back to 2%.

The hawkish comments are shifting the market's view of when the central bank will stop raising interest rates. Fed funds futures traders now posit a 33% likelihood of a quarter-point increase in June, up from 22% one week ago.

Adding to the tougher rate view, the biggest part of the US economy expanded in May. The S&P Global services index rose to a 13-month high, with new orders increased at the fastest pace since April 2022.

The change in outlook lifted the dollar 0.3% to a two-month high, pressuring gold and other commodities priced in it for global trade by making them pricier in other currencies.

Benchmark 10-year Treasury yields pushed higher early in the session, weighing further on the metal by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

But yields reversed direction and gold recouped most of its losses after the White House and Congress ended another fruitless day of debt-ceiling negotiations, putting the US closer to default in early June.

The other precious metals were also lower, with silver falling 1% while platinum and palladium shed 1.8% and 3.1%, respectively.

At the Comex close: June gold dropped $2.70 to $1,974.50; July silver slid 24 cents to $23.62; July platinum fell $19.70 to $1,057.60; and June palladium declined $45.50 to $1,446.70 an ounce.