Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 2% to close under $1,794 as the prospect of bigger, faster rate hikes from the Fed rallied the dollar, punishing alternative stores of value. The metal has slid 3.3% from a 10-week high in the past two session.

The Federal Reserve yesterday signaled its intention to tighten monetary policy aggressively this year, hoping to stifle the highest inflation rate in 40 years. Starting in March, at least four rate increases are slated for 2022, ranging from a quarter point to a half-point each. In addition, the central bank plans begin shedding assets from its $9 trillion balance sheet sometime mid-year.

The dollar surged 1.3% against major rivals, hitting its highest level in 18 months, as Forex traders were drawn to the higher yields expected from rate hikes. A stronger dollar weighs on gold and other commodities by making them more expensive in other currencies, undermining overseas demand.

Benchmark 10-year Treasury yields pulled back under 1.8%, however, as bond traders grew concerned that an overly aggressive Fed could slow the economy. Yield curves have flattened between shorter and longer duration Treasurys by the most in 18 months. Inverted yield curves often precede an economic downturn or recession.

Orders for long-lasting durable goods fell 0.9% in December, more than forecast, behind the omicron variant and fractured supply lines. Meanwhile, the economy grew at an annualized 6.9% in Q4.

The other precious metals were mostly lower, with silver and platinum falling 4.8% and 2.3%, respectively, while palladium added 0.7%.

At the Comex close: February gold lost $36.60 to $1,793.10; March silver shed $1.13 to $22.68; April platinum dropped $24.10 to $1,021.80; and March palladium picked up $15.90 to $2,366.50 an ounce.