Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1.6% to close under $1,938 as a combination of hawkish Fed comments, easing fears of a wider conflict in the Middle East, and sharply higher equities undercut demand for alternative stores of value. Ending a four-week winning streak, the metal posted a weekly decline of 3%, its biggest since September.

In a speech to the IMF yesterday, Fed Chair Jerome Powell said he is “not confident” that inflation has been reversed and warned that further rate hikes are possible. The biggest risk to the US economy, he emphasized, would be failing to get inflation under control.

Powell’s hawkish stance has been reiterated by several regional Fed presidents, including San Francisco’s Mary Daly, who said today that rates are not yet high enough to contain inflation.

The shift in tone surprised the markets and slightly altered the outlook for short-term interest rates. The odds of a quarter-point hike by January jumped to 25%, up from 8% last week, according to CME FedWatch.

Benchmark 10-year Treasury yields extended yesterday’s Powell-inspired climb to 4.65%, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Gold rose more than 8% in October as the Hamas attack upon and response by Israel raised concerns that war could spread throughout the Middle East. Despite devastating losses on both sides, the violence appears to be contained, at least for now, draining some of that premium out of the metal.

Rising risk appetite further pressure gold today as Wall Street surged behind US companies posting their biggest year-over-year gain in quarterly earnings since early 2022. The Dow and S&P 500 jumped 1.2% and 1.6%, respectively, while the Nasdaq rallied 2.1%.

The other precious metals were also down for the day and week. Silver fell 2.7% for a weekly loss of 4.3%. Platinum slid 0.9% today and 10.5% this week. Palladium shed 3% for a whopping weekly decline of 13.3%.

At the Comex close: December gold dropped $32.10 to $1,937.70; December silver shed 62 cents to $22.28; January platinum lost $17.20 to $845.60; and December palladium declined $30.30 to $978.80 an ounce.