Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched down 0.1% but held near an eight-month high above $1,876 as mild rebounds in yields and the dollar triggered profit-taking. The metal had risen 2% over the previous two sessions as weak US data raised hopes that the Fed would slow its rate hike regimen.

Slower than expected wage growth in December, along with Friday's ISM data showing the US services sector fell into contraction, has been causing the markets to bet on a less aggressive Fed. Fed funds futures traders project the likelihood of another quarter-point hike in February at more than 77%. Just a few weeks ago, the odds were nearly 50-50 for a half-point hike.

The shifting rate view has been pressuring yields and the dollar, lifting gold yesterday to the highest level since last June. Today saw some minor retracement in all three trades, which is not unusual after sharp moves.

Benchmark 10-year Treasury yields pushed back up above 3.6% as traders weighed comments by San Francisco Fed's Mary Daly and Atlanta Fed's Raphael Bostic, saying rates will raise above 5%, slightly more than the 5% terminal rate projected by Fed fund futures trading.

Rising yields pressure gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar added 0.3% against major rivals but held near seven-month lows. A rising dollar weighs on gold and other commodities by making them more expensive in other currencies.

The other precious metals were mostly lower. Silver and platinum slid 0.9% each while palladium added 0.1%.

At the Comex close: February gold dipped $1.30 to $1,876.50; March silver slid 21 cents to $23.67; April platinum dropped $10.10 to $1,088.50; and March palladium picked up $1.90 to $1,777.30 per ounce.