Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped 1.1% to close at a one-month high near $2,055 after a modest inflation report and downbeat data on consumer spending and jobless claims pressured the dollar and Treasury yields, lifting alternative assets. The metal rose 0.3% for the month.

The Personal Consumption Expenditures index rose 0.3% in January, precisely in line with forecasts, behind higher prices for services like housing, finance, healthcare, and hospitality. For the 12 months through January, the PCE rose 2.4% for the smallest increase since February 2021.

The so-called core PCE, minus volatile food and energy costs, rose 0.4% for an annual rate of 2.8%, the smallest since March 2021.

Separately, the Commerce Department reported that consumer spending slowed in January, putting downward pressure on economic growth. Consumer spending accounts for roughly 70% of GDP. And first-time jobless claims crept up by 13,000 to 215,000 last week.

Benchmark 10-year Treasury yields pulled back to 4.25% as traders, relieved by the modest PCE numbers, speculated that the Fed will proceed with an initial rate cut in June. Lower yields help gold by decreasing the opportunity cost for holding it instead of bonds for safety.

Fed fund futures traders are now pricing in a 66% likelihood of a quarter-point rate cut in June, up from 63% before the PCE print. Mostly, the markets were relieved that the Fed's favorite inflation gauge was not hotter than expected in January, especially after the surprisingly strong CPI and PPI reports earlier this month.

Tracking lower with yields, the dollar dipped slightly, supporting gold and other commodities by making them less expensive in other currencies.

The other precious metals were mixed for the day and lower for the month. Silver rose 1.2% today but still lost 1.6% in February. Platinum slipped 0.1% for a monthly loss of 5.2%. Palladium picked up 1.7% but still tumbled 6.4% for the month.

At the New York spot close: gold gained $21.70 to $2,054.70; silver added 26 cents, to $22.67; platinum dipped $1.10 to $884; and palladium climbed $15.50 to $933.50 an ounce.