Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained another 0.6% to close above $1,887 as falling Treasury yields and dovish Fed talk continued to buoy sentiment while the Gaza was added to safe-haven demand. The metal has rallied nearly 3% over the past four winning sessions.

Market participants continue to think the Fed may be finished raising interest rates after several prominent Fed officials, including Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan, stated their preference to pause further increases.

Atlanta Fed President Raphael Bostic also said this week that rates are high enough already to bring inflation down to 2%. And Neel Kashkari of the Minneapolis Fed suggested that higher yields are already doing the Fed’s work for it, slowing the economy and therefore inflation.

The dovish shift stands in contrast to the minutes from the Fed’s September policy meeting, released today, which showed “a vast majority” of committee members seeing “the future path” of policy as “highly uncertain.” At that time, most officials thought “one more increase” might be needed.

But some conditions have changed. Treasury yields pushed to a series of 16-yer highs, tightening credit markets. And the turmoil caused by the Hamas-led attack on Israel last weekend adds further uncertainty to the global economy.

Fed fund futures traders now see a 29% chance of another rate hike this year, according to CME FedWatch. But tomorrow’s release of the September CPI should give additional clues.

Benchmark 10-year Treasury yields slipped under 4.6% as investors sought the safety of US government debt. Falling yields help gold by decreasing the opportunity cost for holding it instead of bond as a safe-haven asset. The dollar was little changed.

Gold gains held despite falling oil. US benchmark WTI crude fell 2.2% to $86 pre barrel after Saudi Arabia, a top OPEC producer, pledge to help stabilize the market in the aftermath of the Israeli-Hamas conflict.

The other precious metals were mostly higher, with silver and platinum rising 0.8% and 0.3%, respectively, while palladium edged down less than 0.1%.

At the Comex close: December gold gained $12 to $1,887.30; December silver added 18 cents, to $22.13; January platinum picked up $2.80 to $893; and December palladium dipped $1.10 to $1,170 an ounce.