Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinRising for a second session, gold gained 0.6% to close above $1,716 as gloomy words about the economy from Fed Chair Jerome Powell triggered a selloff in US stock markets, boosting demand for safe-haven assets.

Speaking in a webcast by the Peterson Economic Institute, Chairman Powell called the downturn resulting from COVID-19 "without modern precedent" and "significantly worse than any recession since World War II."

Asserting that the US could face "an extended period of weak economic growth" because of the pandemic, he warned that "the passage of time can turn liquidity problems into solvency problems," presumably fueling personal and corporate bankruptcies.

Although he rejected the idea of using negative interest rates for now, Powell pledged deeper monetary easing if needed. Gold thrives during times of deep monetary stimulus as a hedge against currency debasement and longer-term inflation.

Powell's grim assessment chilled optimism that a partial reopening of the economy might lead to a rapid recovery from the recession. Wall Street reacted strongly, with the Dow dropping 2.5% while the S&P 500 and Nasdaq lost 2.2% and 2%, respectively.

Treasury's rallied alongside gold on flights to safety, driving down yields.

The other precious metals fell, with silver losing 0.2% while platinum and palladium dropped 1% and 2.4%, respectively.

At the Comex close: June gold gained $9.60 to $1,716.40; July silver lost 4 cents to $15.67; July platinum dropped $7.60 to $769.80; and June palladium shed $44.70 to $1,790.70 an ounce.