Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped 0.7% to close above $1,807 after softer than expected consumer inflation pressured bond yields and the dollar, lifting alternative stores of value.

Consumer inflation rose in August at the slowest pace in seven months, suggesting that the big spike in prices caused by Covid-related issues may have passed. The Consumer Price Index added 0.3 while the core CPI, excluding volatile food and energy costs, added just 0.1%.

Benchmark 10-year Treasury yields retreated as traders speculated that weaker inflation will give the Fed additional time before reducing the asset purchases known as quantitative easing. Most analysts now expect the central bank to announce the taper in November rather than later this month, as previously expected.

Ongoing quantitative easing bids up prices on mid- and long-term government debt, pressuring yields. In turn, lower yields help gold by reducing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar also slid after the CPI print, supporting gold by making it less expensive in other currencies. A deferral of tapering would imply interest rates are likely stay lower for longer, since the first step toward raising rates is ending QE altogether.

The other precious metals were mixed, with silver adding 0.4% while platinum and palladium fell 2% and 5%, respectively. The platinum metals group has been hit hard by supply-chain blockages that have reduced the manufacturing of cars and trucks, the main industrial use for the metals.

At the Comex close: December gold gained $12.70 to $1,807.10; December silver added 9 cents, to $23.89; October platinum dropped $18.80 to $938.70; and December palladium tumbled $104.20 to $1,975.60 an ounce.