Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.3% to close near $1,676 on safe-haven inflows after Russia's Vladimir Putin announce a major escalation of his war in Ukraine. The metal then jumped as high as $1,697 in electronic trading after Jerome Powell said a recession might result from the Fed's aggressive campaign of monetary tightening.

As expected, the Fed raised interest rates by 75 basis points for the third straight time, lifting the benchmark rate to between 3% and 3.25%. This increase, the fifth so far this year, had been telegraphed and entirely priced into the market.

In addition, the Fed's policy statement signaled another 1.25% in rate hikes are coming this year, meaning a fourth increase of 75 basis points and another of 50 points by December, lifting the benchmark rate as high as 4.5%.

But the post-meeting press conference is when Powell made waves. Citing the need for increasingly restrictive monetary policy to slow the economy and reduce inflation, he warned that "the chances of a soft landing are likely to diminish" and acknowledged the possibility that "this process will lead to recession."

All three major US stock indexes tumbled more than 1.7% on risk aversion after Powell's comments, while Benchmark 10-year Treasury yields retreated as investors shifted into the perceived safety of government bonds. Gold promptly jumped above $1,696 on flights to safety.

The markets were already in a risk-off stance after Vladimir Putin signaled a major escalation in hostilities by mobilizing 300,000 reservists and suggesting the possibility of using tactical nuclear weapons against Ukraine.

The other precious metals were mixed. Silver rose 1.6% while platinum dropped 0.7% and palladium lost 2.2%.

At the Comex close: December gold gained $4.60 to $1,675.70; December silver climbed 30 cents to $19.48; October platinum shed $6.80 to $916; and December palladium lost $47 to $2,123.50 an ounce.