Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged up 0.1% to close near $1,848 after data showing contraction in the US economy prompted traders to lower their expectations for aggressive rate hikes, pressuring the dollar and lifting alternative stores of value.

The government reported that US GDP fell by an annualized 1.5% in the first quarter, more than previously estimated, and corporate profits fell for the first time in five quarters. The economy continues to expand overall, the data show, but at a significantly slower pace.

Separately, US pending home sales fell nearly 4% in April, signaling continued cooling the crucial housing market. It was the sixth straight month of declines.

The news reinforced the Fed's message in the May minutes, released yesterday, that monetary tightening must now proceed with caution. After months of hawkish forward guidance, many Fed officials softened their approach and suggested the need for flexibility in policy, given the economic headwinds caused by the continuing pandemic and Russia's war on Ukraine.

Wall Street rallied strongly on the softened outlook, with the Dow rising 1.6% while the S&P 500 climbed 2% and the Nasdaq 2.7%. The 2-year Treasury yield, most often correlated with near-term Fed policy, pulled back while the 10-year yield remained virtually unchanged.

The dollar lost 0.2% against major rivals on the prospect of slower rate hikes, lifting gold and other commodities priced in it for global trade by making them less expensive in other currencies.

The other precious metals were also higher, with silver rising 0.5% while platinum and palladium climbed 0.8% and 0.2%, respectively.

At the Comex close: June gold added $1.30, to $1,847.60; July silver gained a dime to $21.97; July platinum rose $8.10 to $937.40; June palladium picked up $4.20 to $1,993.50 an ounce.