Daily Gold Update

Source:Matt Warden, American Gold Exchange

AustinFollowing Jerome Powell's speech this morning at the Jackson Hole economic summit, as well as new readings on personal income, consumer spending, and inflation, gold leapfrogged $1,800 to finish out the week at $1,819.50 per ounce, up 1.3% for the day and 2.1% for the week.

With an over-arching theme of wanting to avoid any ill-timed policy moves that could be harmful, Chairman Powell stated that while "substantial further progress" had been met for inflation, much more improvement was needed to reach maximum employment. He acknowledged the Delta variant posed new risks to growth but indicated reducing the pace of asset purchases, otherwise known as quantitative easing or QE, would likely be appropriate later this year. Mr. Powell emphasized that any tapering of their asset purchases would have no connection with the timing of future interest rate hikes, for which the Fed has "a different and substantially more stringent test".

Personal income rose 1.1% last month, supported by an improving job market and child-care tax credits for young families but offset by a big reduction in unemployment benefits and pandemic-related support over the last month.

Even though incomes rose, consumer spending increased by only 0.3% in July, slowing significantly from June’s 1.1% increase, hampered by the spreading Delta variant, shortages in material goods and service-related labor, and rising inflation. Adjusted for inflation, spending actually fell by 0.1%.

Personal consumption expenditures, or PCE, the Fed’s preferred inflation indicator, increased by 0.4% in July and 4.2% year-over-year, the fastest pace in over 30 years.

The US dollar and benchmark 10-yr US Treasury rates fell quickly after this morning’s speech but leveled off in the afternoon with the dollar finding support at 92.7, down 0.4%, and 10-yr Treasury rates ending the day at session lows of 1.308%, down 3.7% on the day.

The other precious metals surged higher, with silver rising 2.2% today for a strong weekly gain of 4.7%, palladium adding 0.6% today and 6.1% for the week, and platinum jumping an impressive 3.1% on the day to close the week out with a modest 1.3% gain.

At the Comex close: December gold gained $24.30 to $1,819.50; September silver added 51 cents to $24.06; October platinum rose $31.00 to $1,006.50; and December palladium tacked on $15.70 to $2,408.10 an ounce.