Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinSpot gold was nearly flat, inching down 20 cents to hold above $2,026, as slightly lower yields were offset by a mild dollar rise, with traders mostly treading water ahead of this Thursday’s much-anticipated CPI release.

Benchmark 10-year Treasury yields wobbled from small gains to losses but held above 4%, with traders weighing the prospect of slowing global growth against tentative expectations that the Federal Reserve may begin cutting interest rates as soon as its March meeting.

Yields and the gold price typically move inversely, as rising yields increase the opportunity cost for holding the metal instead of bonds, while falling yields make it more economical as a safe-haven asset.

Conflicting Fedspeak is adding to market uncertainty about monetary policy. Yesterday, Atlanta Fed President Raphael Bostic declared his bias to keep interests higher for longer to prevent inflation from bouncing back. Fed Governor Michelle Bowman today said her previously hawkish stance has “evolved” to be more dovish, believing now that inflation will continue to fall without further tightening.

Fed fund futures traders project a 64% likelihood of a quarter-point rate cut in March, down from 71% last week. Thursday’s CPI release should provide additional clarity on future rates. Surprises to the upside may dim the prospects of a March cut while softer inflation could rekindle rate-cut fever.

The dollar added 0.3% against major rivals, pressuring gold and other commodities by making them more expensive in other currencies.

The other precious metals were lower, with silver sliding 1% while platinum and palladium fell 1.7% and 2.2%, respectively.

At the New York spot close: gold dipped 20 cents to $2,026.60; silver shed 22 cents to $22.90; platinum lost $15.90 to $943.50; and palladium retreated by $21.80 to $976.90 an ounce.