Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold was virtually flat, dipping a dime to close at $2,016.80, as mixed US economic data balanced out to leave the outlook for interest rates unchanged heading into next week’s meeting of the Fed. The metal slipped 0.5% for the week.

The Fed’s preferred gauge of inflation, the PCE index, showed prices rose at a moderate 0.2% in December, holding the annualized inflation rate at 2.6%. The so-called core rate, less food and energy, also rose 0.2% for a 2.9% yearly increase, the smallest since March 2021. The data were in line with forecasts.

Against this backdrop of moderating inflation, US retail sales rose 0.7% in December, according to Fed data, signaling solid underlying momentum in this key component of consumer spending. Separately, pending home sales surged in December by 8.3% as lower mortgage rates brought buyers into the market.

While mild inflation could encourage the Fed to reduce interest rates, the solid home sales and retail sales data, combined with yesterday’s report that GDP grew an energetic 3.3% in Q4, could give them pause about possibly lowering rates too soon.

Benchmark 10-year Treasury yields were little changed as traders speculated that today’s data would have little net effect on the Fed’s outlook for interest rates when the central bankers begin their two-day meeting next Tuesday.

Fed fund futures see a 97% likelihood of no changes next week and a 47% chance of a quarter-point decrease in March, little changed from before the data. May continues to be the most likely month for the rate pivot, with markets pricing a quarter-point cut at around 90% probability.

The other precious metals were mixed for the day and higher for the week. Silver slipped 0.3% but held a weekly rise of 0.7%. Platinum added 3% today for a 1.6% gain this week. Palladium picked up 2% today and 1.3% this week.

At the New York spot close: gold dopped a dime to $2,016.80; silver slid six cents to $22.76; platinum jumped $26.80 to $921.30; and palladium added $18.50, to $961.40 an ounce.