Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to close above $1,745 as the dollar and Treasury yields fell on net-negative data ahead of the midday release of Fed minutes. The metal then more than doubled those gains, rising above $1,752 in electronic trading, after the Fed signaled a likely downshift in the size and pace of future rate hikes.

In a positive sign, new homes sales rose in October. But sales of existing homes, which account for 90% of the market, have fallen for the past nine months because of sharply higher mortgage rates, suggesting pervasive weakness in the housing market.

Also, orders for durable goods increased 1% last month, doubling most forecasts, and business investment picked up 0.7%. But analysts view the October gains as unsustainable. Core orders, excluding cars and airplanes, rose by a less impressive 0.5%; and the rates of business investment is slowing considerably as interest rates rise and the economy slows.

The S&P flash surveys for November indicate that economic activity is indeed deteriorating. The US services index fell to a three-month low of 46.1, the lowest of the pandemic era. Services account for roughly two-thirds of GDP. The manufacturing index was little better at 47.6, a 30-month low. Anything under 50 signifies contraction.

Americans are fretting. The University of Michigan survey showed consumer sentiment fell in November and remains deeply depressed year-over-year,

Apparently, the Fed is finally sharing this concern. In the November minutes, released after the Comex close, the Fed staff admitted—for the first time—that a recession is possible next year. And a "substantial majority" of members agreed that smaller increases in rates will "soon be appropriate."

The dovish shift in the Fed's outlook out added pressure on yields and the dollar, which were already falling because of the downbeat economic data.

Benchmark 10-year yields, which move lower with increased demand, dropped to 3.7%, decreasing the opportunity cost for holding gold instead of bonds. And the buck fell 1.1% against major rivals, lifting gold and other commodities by making them less expensive on other currencies.

The other precious metals were mixed before and higher after the Fed. Silver jumped from a gain of 1.5% to 2.5%. Platinum went from a loss of 0.1% to a gain of 0.7%. Palladium extended its rise to 1.7% from 1% at the close.

At the Comex close: December gold added $5.70, $1,745.60; December silver gained 32 cents to $21.37; January platinum dipped $1.10 to $996.80; December palladium picked up $18.40 to $1,875.90 an ounce.