Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinWith markets reopened after the Presidents Day holiday, gold gained 0.8% to close above $2,027 as yields and the dollar weakened on China stimulus measures, lifting alternative stores of value.

The People’s Bank of China cuts its 5-year prime rate by 25 basis points, the most since the reference rate was introduced in 2019. An effort to support China's collapsing real estate market, the cut comes as consumer sentiment, manufacturing activity, and GDP growth all have struggled in the post-pandemic period.

Benchmark 10-year Treasury yields dropped to 4.25% as investors sought safety from worries about China’s economic struggles and slower global growth. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking lower with yields but for a different reason, the dollar slipped 0.2% against major rivals, boosting gold by making it cheaper overseas.

Whereas yields fell on safe-haven inflows into bonds because of China’s economic weakness, the dollar fell on bets that China will provide additional stimulus, lifting emerging market currencies at the dollar’s expense.

Additional stimulus within the world's second-largest gold consumer is also expected to support physical demand as a hedge against a weaker yuan.

The Conference Board’s index of leading economic indicators fell for the 22nd straight month, the third-longest losing streak on record. Yet six of its ten gauges showed positive results over the past six months for the first time in two years, prompting the Conference Board to lift its forecast of recession.

The other precious metals were mixed, with silver dropping 1.4% while platinum added less than 0.1% and palladium jumped 3.2%.

At the New York spot close: gold gained $16 to $2,027.50; silver dropped 34 cents to $23.14; platinum picked up 80 cents to $914.30; and palladium climbed $30.50 to $983.30 an ounce.