Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold added 0.1% to close above $1,719 before the much-awaited conclusion of the Fed’s July meeting on monetary policy. The metal then jumped above $1,736 in electronic trade following the Fed’s decision to deliver its second jumbo hike in as many months.

In a widely anticipated move, the Fed again raised a key US interest rate by 75 basis points to combat the strongest inflation in 41 years. The unanimous vote pushed the Fed Funds Rate to between 2.25% and 2.5%. It was the fourth rate hike this year, resulting in the fastest increase since 1981.

The post-meeting statement flagged weakening data as reason to be cautious.

Gold initially weakened after the decision but quickly shot higher as Treasury yields and the dollar pulled back. Many currency and bond traders had positioned themselves for a 1% rate hike, which seemed likely until recent US data showed the economy slipping toward recession.

The dollar lost 0.6% after the hike, supporting gold and other commodities by making them cheaper in other currencies. Benchmark 10-year Treasury yields pulled back under 2.8%, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The other precious metals were mixed before and higher after the Fed. Silver added 0.4% before jumping to a 1.2% gain. Platinum rose 1.5% and then pushed up to 1.7%. Palladium flipped from a 0.3% loss to a 0.4% gain.

At the Comex close: August gold added rose $1.40, to $1,719.10; September silver rose 7 cents to 18.60; October platinum climbed $12.80 to $877.20; and September palladium prices slid $6.80 to $2,004.40 an ounce.