Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold gained for a second session, edging up 0.1% to close above $1,211, as bargain-hunters and physical buying in Asia and Russia helped to buoy the market despite rising risk appetite and a higher dollar.

Wall Street rallied to new highs, with the Dow eclipsing 19,000 and the S&P 500 topping 2,200 for the first time ever, on expectations that Donald Trump's policies of cutting taxes and deregulating industries like banking, healthcare, and energy will boost corporate profits. In addition, existing home sales jumped to a nine-year high last month, adding momentum for better Q4 growth.

The dollar crept higher, adding 0.2% against major rivals, as the upbeat housing data all but sealed the deal on a December rate hike the Fed. CME FedWatch now places the odds at 100% for a quarter-point increase. Rising rates strengthen the dollar, and a stronger dollar typically pressures gold and other commodities denominated in it for international trade by making them more expensive to users of other currencies.

The dollar has risen around 5%, in the past two weeks, driving gold to nine-month lows, as traders speculate that Trump's policies will also fuel much higher inflation, spurring additional rate hikes from the Fed. While higher inflation is likely to weigh on gold in the short term, it promises to be bullish for the metal in the longer term as an inflation-hedge. Gains over the past two sessions reflect an underlying appetite for gold's traditional role in protecting purchasing power.

Russia added 48 tonnes of gold in October for its biggest monthly purchase since 1998. Demand for physical gold in Southeast Asia is sharply higher on bargain-hunting, and premiums for gold bullion in India are skyrocketing on a surge of demand ahead of the government's plan to flush out money held outside of the tax system.

The other precious metals also rose, with silver and platinum both gaining 0.7% while palladium added 2.4%.

At the Comex close: December gold picked up $1.40 to $1,211.20; December gained 11 cents, to $16.63; January platinum added $6.50, to $943; and December palladium rose $17.70 to $744.25 an ounce.