Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.8% to close at $1,815 after upbeat retail sales data drove a mild rebound in the dollar, prompting traders to take profits from gold's three-day rally to the highest level in a month. The metal still added 0.2% for the week to post its fourth consecutive weekly rise behind dovish Congressional testimony by Fed Chair Powell.

Retail sales rose 0.6% in June as more Americans, enjoying the end of Covid restrictions, spent freely on going to bars, restaurants, and vacation destinations. The print far exceeded forecasts, most of which projected a decline of 0.4%. Retail sales are now up 18% for year, exceeding pre-pandemic levels.

Not all the day's data was positive, however. Consumer sentiment fell to a six-month low, according to the University of Michigan survey, as consumers grew increasingly concerned about job gains and rising Covid infections due to the aggressive Delta variant.

Nonetheless, the dollar rose 0.2% against major rivals as traders speculated that the strong retail sales report signals solid GDP growth for Q2. The buck posted a weekly rise of 0.6%, its best in a month. A rising dollar weighs on gold and other commodities by making them more expensive in other currencies, curtailing overseas demand.

Despite the dollar's good week, gold held on for its fourth straight weekly win on the strength of Jerome Powell's resolutely dovish testimony to Congress. The head central banker rejected the idea that the Fed should tighten monetary policy in the near future, either by reducing quantitative easing or by raising interest rates prematurely to control spiking inflation.

Quantitative easing is bullish for gold because it keeps yields low, reducing the opportunity cost for holding it instead of bonds. In addition, low interest rates pressure the dollar and spur demand for gold as an alternative store of value and hedge against loss of purchasing power.

The other precious metals were lower for the day and mixed for the week. Silver dropped 2.3% today for a weekly loss of 1.7%. Platinum fell 2.6% for the session but still rose 1.2% for the week. Palladium shed 3.4% for a weekly loss of 6.6%.

At the Comex close: August gold dropped $14 to $1,815; September silver slid 60 cents to $25.80; October platinum lost $29.20 to $1,108.50; and September palladium tumbled $92 to $2,637.30 an ounce.