Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged down 0.1% to close above $1,836 as Treasury yields edged higher on inflation expectations despite falling stocks and a weaker dollar. It was the metal's first loss in five sessions as it pulled back from near a three-month high.

Factory prices in China accelerated at the fastest pace since late 2017 in April, and the nation's producer price index surged 6.8% from a year ago, setting the stage for significantly higher consumer prices in economies like the US that depend on Chinese imports.

With traders bracing for sharply higher inflation when the US Consumer Price Index is released tomorrow, the Dow lost nearly 1.4% and the S&P 500 slid nearly 1%.

Benchmark 10-year Treasury yields edged up despite the risk-off sentiment on worries about inflation. Higher yields create headwinds for gold by increasing the opportunity cost for holding the metal, even though it typically rises in inflationary environments as a hedge against higher prices.

The dollar dipped to a new 10-week low on expectations that higher inflation will reduce its purchasing power. A weaker dollar supports gold and other commodities priced in it for global trade by making them less expensive overseas.

In a normal economic climate, rising inflation would support the dollar because it leads to higher interest rates, which in turn attract Forex investors seeking higher yields. But the Fed has repeatedly pledged to leave interest rates unchanged despite any surges in inflation this year.

The other precious metals were mostly lower, with platinum and palladium dropping 1.4% and 1.9%, respectively, while outlier silver rose 0.7%.

At the Comex close: June gold dipped $1.50 to $1,836.10; July silver rose 18 cents to $27.67; July platinum dropped $23.30 to $1,241.20; and June palladium lost $42 to $2,926.20 an ounce.