Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.5% to close at an eight-week low near $1,817 after hot US inflation and strong economic data boosted yields and the dollar, undercutting alternative stores of value. The metal lost 1.8% for week to notch its fourth straight weekly decline.

The Fed's preferred inflation gauge, the PCE index, jumped 0.6% in January, lifting the 12-month rate to 5.4%. It was the biggest monthly rise since the summer and the first 12-month increase in seven months.

Consumer spending rose 1.8% in January, the first in three months and the biggest increase in two years. While the bulk came from sharply higher auto sales that are unlikely to continue, the increase still beat forecasts. Consumer spending accounts for roughly two-thirds of GDP.

Consumer sentiment is also improving, with the University of Michigan index surging to a 13-month high in February on growing optimism that the US may avoid a recession. Sentiment remains far below pre-pandemic levels, however.

Benchmark 10-year Treasury yields leapt to just under 4% as traders speculated that the Fed will be forced to raise interest rates higher and for longer to fight stubborn inflation. While gold is often sought as an inflation hedge, higher yields present a headwind because they increase the opportunity cost for holding it instead of bonds for safety.

Tracking higher with yields, the dollar rallied 0.7% to reach a seven-week high against major rivals. A stronger dollar weighs on gold and other commodities by making them pricier in other currencies, limited demand overseas.

They other precious metals were also lower for the day and week. Silver lost 2.3% for a weekly decline of 4.2%. Platinum shed 4% today and 1.5% this week. Palladium dropped 3.6% for the sessions and 7.6% for the week.

At the Comex close: April gold slid $9.70 to $1,817.10; March silver dropped 50 cents to $20.81; April platinum declined by $37.60 to $907.90; and March palladium tumbled $51.30 to $1,377.30 an ounce.