Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinInching down 60 cents to close under $1,843, gold was little changed after a mild rebound in the dollar was nearly offset by continuing worries about geopolitics, omicron, and inflation. The metal pushed up to $1,848 in intraday trade before slipping back on profit-taking.

Yesterday, gold rallied 1.7% to the highest level since mid-November as investors flocked to the metal despite an increasingly hawkish Fed. The imminent threat of an invasion of the Ukraine by Russia, along with the resurgent pandemic and the strongest inflation since the 1980s, is re-whetting appetite for bullion.

In addition, with four rate hikes in 2022 already priced in, traders worry that the Fed will make a policy mistake, tightening either too much or too little. Gold is seen as portfolio protection against either error, hedging against stifled growth on one hand or persistent inflation on the other.

First-time jobless claims jumped 55,000 to 268,000 last week, the highest level in three months, as widespread omicron infections caused more layoffs and kept people out of work. Ongoing benefit claims rose 84,000 to 1.64 million.

Existing homes sales retreated last month, dropping 4.6% in December behind rising mortgage rates and ongoing inventory constraints.

On the positive side, the Philly Fed region reported factory conditions improved this month, with the manufacturing index rising above 23, where any reading over zero indicates expansion. The gain was unexpected after New York's Empire State index fell into contraction because of the impact of omicron.

Meanwhile, President Biden admitted today that he expects Russia to violate Ukraine's sovereignty with an incursion over the border.

All three US stock indexes bounced from mild gains to sharp losses as investors moved from tepid risk appetite back to safe havens. Benchmark 10-year Treasury yields also slipped slightly, backstopping gold by decreasing the opportunity cost for holding it instead of bonds.

The dollar edged up 0.3%, pressuring gold by making it pricier in other currencies. A pullback in oil also weighed on the metal as WTI crude dipped 0.8% on profit-taking after rising yesterday to a seven-year high.

The other precious metals gained on the day, with silver adding 2% while platinum and palladium picked up 2.2% and 3.3%, respectively.

At the Comex close: February gold dipped 60 cents to $1,842.60; March delivery added 48 cents, to settle at $24.72; April platinum picked up $22.40 to $1,050.80; and March palladium jumped $63.40 to $2,073.70 an ounce.