Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.5% to close under $1,849 after global inflation worries and hawkish words from a Fed official lifted yields and the dollar, pressuring alternative stores of value. The same headwinds took their toll for the month, pushing the metal 3.1% lower in May for its second straight monthly decline.

In a speech in Germany, Fed governor Christopher Waller said today that he advocates rate hikes of 50 basis points over the next “several meetings,” with the intention lifting rates “above neutral” by the end of the year.

The hawkish message contradicts Fed Chair Jerome Powell, who last week suggested pausing aggressive increases after two more. A growing number of Fed officials, concerned that overly aggressive tightening could tip a slowing economy toward recession, had been recently signaling a similarly softer approach.

Against this background, US consumer confidence fell in May to a three-month low over inflation worries and slower growth, according to the Conference Board. Consumer spending constitutes roughly 70% of GDP.

Meanwhile, global inflation worries mounted as the eurozone recorded record-high inflation of 8.1% in May. US home prices rose at a record 21.2% year-over-year though March, despite higher mortgage rates cause by Fed tightening.

Benchmark 10-year Treasury yields jumped after Waller’s speech, rising above 2.86% from under 2.75%. Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar also gained, adding 0.2% against major rivals. A stronger dollar pressures gold and other commodities by making them pricier in other currencies.

The other precious metals were mixed. Silver lost 1.8% on its way to a monthly loss of around 6%. Platinum added 2.7% while palladium lost 2.4%.

At the Comex close: August gold dropped $8.90 to $1,848.40; July silver dropped 41 cents to $21.69; July platinum picked up $25.30 to $968.30; and September palladium shed $48.50 to $2,006.30 an ounce.