Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to close near $1,785 as sharply higher US labor costs pulled investors towards inflation hedges despite rising risk appetite and higher Treasury yields. It was the metal's strongest finish in a week.

The Labor Department reported unit labor costs surged at an annualized 9.6% in the third quarter, higher than the 8.3% initially estimated and much higher than the 5.9% rate in Q2. The jump came as hour wages rose nearly 4% and worker productivity tumbled by 5.2%.

With consumer inflation running well above 6% and wholesale inflation over 8%, rising labor costs suggest higher prices may persist for longer than expected. Last week Fed Chair Powell admitted as much, saying the word "transitory" no longer applies to US inflation. Gold is often sought as a hedge against loss of purchasing power due.

Gold's rise was limited by heightened risk sentiment as worries about the omicron variant faded and China stepped up support for its economic recovery. The Dow added 1.4% while the S&P 500 jumped 2.1% and the Nasdaq 3%.

Most reports about the new covid strain suggest it is less deadly, if more infectious, that the delta variant and therefore less likely to disrupt the economy. Meanwhile, the PBOC cut reserve requirements for China's banks in an effort to stoke the world's second largest economy.

Benchmark 10-year Treasury yields inched up as traders shifted from bonds to stocks, further crimping gold's rise. Higher yields increase the opportunity cost for holding the metal instead of bonds as a safe-haven asset. The dollar was flat.

The other precious metals were also higher, with silver rebounding 1.2% while platinum and palladium added 1.5% and 0.1%, respectively.

At the Comex close: February gold gained $5.20 to $1,784.70; March silver rose 26 cents to $22.52; January platinum picked up $13.60 to $950; and March palladium edged up $1.30 to $1,847 an ounce.