Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.2% to close above $1,794 after weak services-sector data increased bets that the Fed will pause rate hikes, pressuring the dollar and lifting alternative stores of value.

The ISM services index fell to a five-month low of 50.3 in May, down from nearly 52 in April. With service-related businesses like retail, healthcare, travel, and food service comprising around two-thirds of GDP, the unexpectedly low reading suggests the economy is starting to feel the weight of high interest rates.

The data follows last week's ISM report that the slump in manufacturing continues. And Friday's nonfarm payrolls data showed the unemployment rate climbing from 3.4% to 3.7% despite the 339,000 new jobs added in April.

The dollar surrendered early gains following the ISM release, slipping into the red as traders raised their bets that the Fed will pause rate hikes when it meets next week. A falling dollar typically boosts gold and other commodities by making them cheaper in other currencies.

According to CME FedWatch, Fed fund futures now project an 80% likelihood that the Fed will leave rates unchanged. One week ago, the odds of a pause were 36% against 64% for a quarter-point increase.

Benchmark 10-year Treasury yields slipped under 3.7% on the shifting rate view, supporting gold by decreasing the opportunity cost for holding it instead of gold as a safe-haven asset.

The other precious metals were mixed, with silver and palladium slipping 0.5% and 0.3%, respectively, while platinum advanced 3.3%.

At the Comex close: August gold gained $4.70 to $1,974.30; July silver dipped 11 cents to $23.64; July platinum picked up $32.90 to $1,036.40; and September palladium lost $6.80 to $1,410.30 an ounce.