Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched up less than 0.1% to close above $1,951 despite slight increases in yields and the dollar as oil prices rose to a three-week high. The metal still dipped 0.3% for the week after the Fed's "hawkish pause" in rate hikes. It was the metal's first down week in the past three.

As expected, the Fed left interest rates unchanged this week for the first time in eleven months. But the central bankers went out of their way to convince the markets that the most aggressive rate-hike cycle in 40 years is not over yet.

The Fed's updated dot-plot projection of future policy moves shows two more hikes of 25 basis points this year. In his post-meeting press conference, Fed Chair Jerome Powell emphasized that "nearly all Fed officials" expect that further rate increases are "appropriate."

While traders largely discount the likelihood that two more will occur, the message was clear enough: that the market should not start thinking about rate cuts anytime soon. Richmond Federal Reserve President Tom Barkin reinforced that view today, saying he is "comfortable doing more" to drive inflation back the Fed's 2% target.

Yields and the dollar both edged higher on the tough Fed talk, limiting gold's rise. Higher yields pressure the metal by increasing the opportunity cost for holding it instead of bonds. A rising dollar makes it more expensive overseas.

Supporting gold's gains, oil prices jumped again to a three-week high above $71 per barrel on reports that China is preparing aggressive economic stimulus to kickstart its moribund growth. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mixed for the day and week. Silver added 0.8% today but slid 1.2% this week. Platinum lost 0.5% for a weekly loss of 2.5%. Palladium rose another 1.4% for a weekly win of 8.5%.

At the Comex close: August gold added 50 cents, to $1,9671.20; July silver rose 11 cents to $24.13; July platinum slipped $4.60 to $987.30; and September palladium picked up $18.90 to $1,416.20 an ounce.