Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.9% to close just above $1,700 after comments by Fed Chair Jerome Powell caused Treasury yields and the dollar to spike higher, undercutting alternative assets. It was the metal's lowest finish since early last June.

Speaking at a Wall Street Journal webinar, Powell again dismissed concerns that the Fed's easy money policies and the Biden administration's $1.9 trillion pandemic relief bill will cause an overheated economy and runaway inflation.

Reiterating his position that the Fed is still "a long way" from its twin goals of maximum employment and stable 2% inflation, Powell said he is "monitoring" the recent rise in bond yields but signaled no inclination to stop it, calling it "not appropriate to isolate on particular interest rate or price."

Stocks and bonds sold off in response to Powell's passive approach. All three major US equity indexes lost more than 1% while benchmark 10-year Treasury yields, which move in opposite direction of bond prices, climbed back above 1.5%.

Disappointed traders had apparently been hoping for indications that the Fed would take concrete measures to lower yields, perhaps by extending the duration on the bonds it buys through quantitative easing.

Rising bond yields weigh on gold by increasing the opportunity cost for holding the non-yielding asset instead of bonds as a safe haven.

The dollar surged 0.7% against major rivals on speculation that Fed policies and fiscal spending will drive the US economy to recover more quickly than the eurozone and Japan. A stronger dollar pressures gold and other commodities by making them pricier in other currencies.

The other precious metals were also lower, with silver shedding 3.5% while platinum and palladium dropped 3.9% and 0.5%, respectively.

At the Comex close: April gold fell $15.10 to $1,700.70; May silver lost 93 cents to $25.46; April platinum tumbled $46.50 to $1,135.30; and June palladium slid $11.60 to $2,342.80 an ounce.