Daily Gold Update

Source:Dana Samuelson, American Gold Exchange

AustinGold fell 0.5% today following the release of yesterday's Fed minutes that implied the Fed was modestly less dovish than markets previously anticipated. Yields for the 2-year, 10-year and 30-year U.S. Treasury notes rose 2.3%, 1.5% and 1.3% respectively, helping to push gold slightly lower as traders continued to digest the information contained in yesterday's July Fed minutes release.

Tumbling bond yields world-wide have been the primary driver of gold's strong break out rally from $1,330 in early June to as high as $1,531 last week. When yields fall, the real rate of return (yield minus inflation) falls making gold more attractive to hold because gold does not produce a yield. In this environment gold is seen as an attractive preservation of wealth vehicle and, of course, as the ultimate currency of last resort.

With Fed members indicating a lower desire to reduce interest rates both during their July meeting and in the coming months than many traders expected, safe-haven bonds sold off slightly and yields rose, rebounding off lows set last week. Bond yields have fallen relentlessly since early May in a massive international flight to safety, first into bonds and then into gold. Yesterday's Fed minutes may have finally given the bond markets justification to stem this relentless yield decline in the short-term.

In other news the Congressional Budget Office estimated that the Federal budget deficit will be $960 billion in 2019 and will average $1.2 trillion per year between 2020 and 2029. The CBO also estimated economic output is expected to grow by 2.3% this year but will decline to 1.8% per, on average, through 2023.

At the Comex close: December gold fell $7.20 to $1,508.50; September silver fell $0.11 to $17.04; October platinum added $3.80 to $861.90; and September palladium gained $19.70 to 1485.20 an ounce.