Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold futures surged 3.1% to close above $1,815 as weaker inflation data hammered the dollar and bond yields, boosting alternative stores of value. It was the metal's biggest daily gain since April 2020 and first finish above $1,800 in four months.

The Fed's preferred inflation gauge, the PCE index, rose a scant 0.3% in October, pulling the 12-month rate down to 6% from 6.2%. The core PCE, excluding food and energy costs, rose just 0.2% for an annual rate of 5%.

Coming one day after dovish comments from Fed Chair Jerome Powell, the softer inflation data reinforced expectations that the central bank will slow the pace of interest rate hikes beginning this month.

The Fed has been trying to thread a needle, hiking rates at an unprecedented pace to slow the economy and stifle inflation while trying desperately not to trigger recession. But another weak data point shows the Fed is again behind the curve.

The ISM reported factory activity fell into contraction for the first time since the start of the pandemic in May 2020, when the US went into lockdown and the global economy saw its weakest stretch since the Great Depression.

Benchmark 10-year Treasury yields to tumbled to a nine-week low near 3.5% as investors bet on slowing rate hikes while also seeking safety from the possibility of recession. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar tracked lower with yields, plunging 1.2% against major rivals and boosting gold and other commodities by making them less expensive on other currencies.

The other precious metals were also sharply higher. Silver jumped 4.9%; platinum picked up 1.5%; and palladium climbed 4.3%.

At the Comex close: February gold surged $55.30 to 1,815.20; March silver climbed $1.06 to $22.84; January platinum added $15.60, to $1,054.90; and March palladium rose $80.30 to $1,946.30 an ounce.