Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped another 1.3% to close at a three-month high near $1,328 as persistent trade fears and a dovish Fed view on interest rates pressured the dollar and boosted alternative stores of value. The metal has risen 2.8% in the past two sessions.

Coupled with the escalating the trade war with China, Friday's announcement by President Trump of new tariffs on Mexico helped pushed yields on 10-year Treasury's to the lowest level in 18 months, further inverting the yield curve between 3-month and 10-year notes.

Measuring the difference between the yield on longer-term Treasury notes and their shorter-term counterparts, the yield curve usually slopes upward because investors demand higher yields for tying up their money for a longer period. But when investors think the future will be less profitable than the present, that curve inverts. An inverted yield curve has preceded the last seven recessions.

Adding to growth concerns, the ISM reported that US manufacturing expanded in May at the slowest pace in 2.5 years, hampered by economic weakness in the Eurozone and trade tensions with China. St. Louis Fed President James Bullard said today trade wars with China and Mexico may require the Fed to cut interest rates sooner than expected.

The dollar fell 0.5% on trade concerns and speculation that the Fed will cut rates this year, perhaps more than once. CME FedWatch now forecasts a 98% likelihood that rates will drop by December, with an 86% likelihood to two rate cuts this year. Lower rates weaken the dollar, boosting gold and other commodities priced in dollars for global trade by making them less expensive overseas.

The other precious metals were mostly higher, with silver and platinum rising 1.2% and 3.4%, respectively, while palladium fell 1.2%.

At the Comex close: August gold jumped $16.80 to $1,327.90; July silver rose 17 cents to $14.74; July platinum climbed $26.70 to $820.90; and September palladium dropped $16.50 to $1,315 an ounce.