Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.6% to close at $1,686 on bargain-hunting and flights to safety after the IMF issued stark warnings about the global economy.

The International Monetary Fund reported today that the global economy is at its most vulnerable since the Covid crisis in 2020. In addition, the combination of high inflation, deep weakness in China's economy, and Russia's war on Ukraine are creating risks to growth of the magnitude of 2008 financial crisis, according to the IMF analysis.

Meanwhile, the markets are bracing for what is expected to be a hot inflation reading later this week, and the higher interest rates that are likely to follow. Economists forecast the September CPI to print at 8.1%, down slightly from August's 8.3% because of lower gasoline prices. But the core CPI, stripping out food and energy, is projected to rise 20 basis points to 6.5%.

Cleveland Fed President Loretta Mester, citing a lack of progress on reducing inflation, said rates must rise further and stay elevated, perhaps through next year.

Benchmark 10-year Treasury yields pushed above 3.9% on the hawkish rate view. While gold is considered a hedge against inflation, higher yields weigh on it by increasing the opportunity cost for holding it instead of bonds.

After gaining 2.2% last week, gold fell 2% yesterday as traders repositioned themselves for this week's inflation data. But given the risks outlined by today's IMF report, that retracement was excessive and brought bargain-hunters back into the market, bidding up the metal despite the higher yields and hawkish rate view.

The other precious metals were mostly lower, with silver and palladium sliding 0.7% and 0.8%, respectively, while platinum added 0.4%.

At the Comex close: December gold gained $10.80 to $1,686; December silver slipped 13 cents to $19.49; January platinum added $3.30, to $899.10; and December palladium dropped $17.50 to $2,150.40 an ounce.