Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell another 1.6% to close under $1,737, a nine-month low, as yields and the dollar rose on a hawkish Fed rate view, undercutting alternative stores of value. It was the metal’s seventh straight down session, the most since March 2019.

The Fed’s minutes from its June meeting confirmed the fight against inflation will take precedence over the short-term health of the economy. As they delivered the biggest rate hike since 1994, the central bankers all but committed to more of that size in coming meetings, admitting they “could slow the pace of economic growth for a time.”

Meanwhile, the ISM reported US services businesses grew in June at the slowest pace in two years. The services sector constitutes 67% of GDP.

Benchmark 10-year Treasury yields rose sharply before and after the release of the Fed minutes, pushing back above 2.9% after receding in recent sessions on rising fears of glob al recession. Higher yields weigh on gold, despite its traditional roles as safe-haven asset and inflation hedge, because they increase the opportunity cost for holding it instead of bonds.

The dollar extended its impressive run, adding another 0.5% to reach fresh 20-year highs against major rivals. A stronger dollar pressures gold and other commodities by making them more expensive in other currencies, limiting overseas demand.

Continued weakness in oil prices also hurt the metal. Brent crude, the global benchmark, slid another 2% to a 12-week low on worries about decreasing demand during a potential global recession. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mixed, with silver adding 0.2% while platinum and palladium both lost 1.2%.

At the Comex close: August gold fell $27.40 to $1,736.50; July silver rose 4 cents to $19.16; October platinum dropped $9.80 to $840.90; and September palladium slid $22.50 to $1,896.30 an ounce.