Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold was nearly flat, inching down less than 0.1% to close at $1,931 on hawkish Fed talk and falling oil ahead of this week's CPI release.

Despite last Friday's job data showing a softer labor market, a pair of Fed officials called for higher interest rates to slow the economy further. Mary Daly of the San Francisco Fed said "a couple more rate hikes will be necessary" to fight "persistently" high inflation.

Separately, Cleveland Fed President Loretta Mester said higher rates are needed because inflation is likely to exceed 2% for four years.

Fed fund futures traders continue to reflect odds of more than 92% that the central bank will raise rates by a quarter-point when it meets later this month. Wednesday's release of the consumer price index for June should give clues to the Fed's sentiment beyond that meeting.

While gold is often sought as a hedge against inflation, rising rates tend to weigh on the metal by lifting yields and increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Also pressuring gold, oil prices fell 1% to $77.70 per barrel on speculation that higher interest rates could tip the economy toward recession and limit demand. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

A new study by Invesco Global Sovereign Asset Management shows an increasing number of central banks are repatriating gold reserves rather than letting them be housed beyond their national borders. Rising geopolitical risk and the desire to diversify away from the dollar are making gold more attractive to 60% of the 142 institutions surveyed, including 57 central banks and 85 sovereign wealth funds.

The other precious were mixed, with silver and platinum adding 0.2% and 1.8%, respectively, while palladium slid 0.7%.

At the Comex close: August gold dipped $1.50 to $1,931; September silver added 6 cents, to $23.35; October platinum picked up $16.30 to $934.80; and September palladium shed by $8.40 to $1,236.70 an ounce.