Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained for a second day, adding 0.7% to close near $1,837, after a spate of weak US economic data rekindled recession worries and spurred safe-haven demand. But the metal lost 5.6% in February, its biggest monthly decline since last June, as the prospect of still higher interest rates lifted yields and the dollar, undercutting alternative assets.

US consumer confidence fell to a three-month low in February, according to the Conference Board, behind growing concerns that high inflation and rising interest rates will push the economy into recession and cool the hot job market.

The confidence gauge looks at whether the economy is getting better or worse through the lens of employment and the labor market. The consumer sentiment gauge, which rose to a 10-month high in January, emphasizes individual household finances in measuring outlook.

The Chicago Business Barometer fell further into the negative in February, posting its sixth consecutive month of contraction. Also called the Chicago PMI, it final regional manufacturing gauge to be released before the national ISM index, which is projected to decline for the fourth straight month.

The US trade deficit in goods rose 2% in January to a three-month high, indicating higher inflation and continuing demand for imported goods. A large trade deficit weighs on GDP, the main measure of economic growth.

Despite the downbeat data, benchmark 10-year Treasury yields edged up again on expectations that the Fed will continue raising interest rates and hold them higher for longer. Yields have risen to multi-month highs in the past few weeks, pressuring gold, as hot inflation and jobs data have changed the narrative about coming rate hikes.

Fed fund futures trading now projects a terminal rate of 5.4% this summer with no rate cuts coming this year. Just a few weeks ago, the terminal rate was pegged at 4.9% with expectations that the Fed would start cutting rates by the year's end to prevent a recession.

The dollar added 0.2% on the increasingly hawkish rate view. Putting substantial pressure on the gold price in February, the buck rose 2.4% for the month for its first monthly advance since September. A stronger dollar makes gold and other commodities pricier in other currencies, slowing demand overseas.

The other precious metals were mixed for the day and lower for the month. Silver added 1.7% today but lost 12% in February. Platinum picked up 1.4% for a monthly decline of 6.4%. Palladium was down 0.5% for the session and 14% for the month.

At the Comex close: April gold gained $11.80 to $1,836.70; May silver climbed 28 cents to $21.07; April platinum picked up $13.60 to $955.50; and June palladium shed $7 to $1,420.90 an ounce.