Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.8% to close under $1,974 as rising risk appetite, a stronger dollar, and falling oil prices pressured alternative stores of value. It was the metal’s second down session and lowest finish in nearly three weeks.

Wall Street extended its impressive rally, with all three major indexes pushing their winning streaks for at least seven days on rising expectations that the Fed is done raising interest rates. The Dow edged up 0.2% while the S&P 500 added 0.3% and the rate-sensitive Nasdaq jumped 1%.

With manufacturing and job growth cooling in October and consumer confidence tumbling to a five-month low, the markets are increasingly concluding that the Fed’s aggressive rate-hike cycle has finally reached its end. Traders in Fed fund futures are pricing in a 90% likelihood of another pause in December followed by three rate cuts by next November.

Benchmark 10-year Treasury yields slipped back under 4.6% on the dovish view, something that typically supports gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

But the dollar diverged from yields, climbing 0.2% as the euro fell on disappointing eurozone data. A rising dollar is a headwind for gold and other commodities because it makes them more expensive in other currencies, undercutting demand overseas.

Industrial production in Germany, the bloc’s economic powerhouse, fell more than expected in September. And German manufacturing PMI for October showed a deep contraction.

Soft data from China also took a toll. Oil prices tumbled more than 3% after China’s exports of goods and services contracted more quickly than forecast, raising concerns about demand for crude. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also lower, with silver sliding 2.8% while platinum and palladium dropped 2.1% and 4.6%, respectively.

At the Comex close: December gold fell $15.10 to $1,973.50; December silver shed 65 cents to $22.59; January platinum lost $19.60 to $898; and December palladium declined $51.50 to $1,062.80 an ounce.