Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.4% to close above $2,025 despite a slightly higher dollar as escalating tensions in the Middle East stoked safe-haven inflows ahead of the Fed’s meeting on monetary policy.

Three US troops were and at least 34 were wounded in a drone attack by Iran-backed militants in Jordan over the weekend, marking the first fatalities for the US servicemen since the Gaza war began. President Biden vowed retaliation at “a time and in a manner of our choosing,” significantly raising concerns about a wider regional conflict.

Benchmark 10-year Treasury yields slipped back near 4.1% as investors sought safety in government bonds and precious metals. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds.

Capping gold’s rise, the dollar added around 0.2% as traders positioned themselves for the possibility that the Fed, at the conclusion of this week’s policy meeting, may backpedal from the dovish stance it struck in December. A stronger dollar pressures gold and other commodities by making them pricier in other currencies.

At its December meeting, the Fed signaled that inflation looked contained and a policy pivot was coming, driving market expectations for rate cuts as soon as March. Since then, strong US economic data and hawkish commentary from individual Fed officials has reduced the odds for a March cut from 80% a few weeks ago to around 50% now.

This week’s policy statement and presser by Jerome Powell on Wednesday will be scoured for new clues about when the pivot will begin and how deeply the Fed will cut. Fed fund futures traders put the odds of a quarter-point May cut at 88.3%.

The other precious metals were also higher, with silver added 1.7% while platinum and palladium picked up 1.8% and 2%, respectively.

At the New York spot close: gold gained $8.40 to $2,025.20; silver rose 38 cents to $23.13; platinum climbed $17 to $938.30; and palladium advanced $19.80 to $981.20 an ounce.