Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rallied 2.3% to close near $1,754 as bond yields and the dollar plunged after cooler-than-expected consumer inflation raised hopes for a less aggressive Fed. The metal has now risen 7.2% over the past five sessions, notching its highest finish since late August.

Consumer Price Index for October rose 0.4%, dropping the yearly rate of inflation to 7.7%, the lowest level since January. The so-called core CPI, excluding volatile food and energy costs, fell to 6.3% from 6.6% in September.

Benchmark 10-year Treasury yields fell by nearly 30 basis points to 3.85% on speculation that softer inflation may cause the Fed to slow its hyper-aggressive rate hikes in coming months. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Two Fed officials added to the gentler rate-hike speculation. Philadelphia Fed President Patrick Harker said it's likely "we will slow the pace" in coming months. San Francisco's Mary Daly mentioned "stepping down" the size of increases while keeping rates "sufficiently restrictive."

Tracking lower with yields, the dollar tumbled 2.1% to a multi-month low against major rivals. A falling dollar lifts gold and other commodities by making them less expensive in other currencies, fueling demand overseas.

Wall Street cheered the upbeat inflation data, with the tech-heavy Nasdaq leading the way with a 6.3% jump. High-flying tech stocks are especially vulnerable to interest rates because their value is based on future profits. The Dow and S&P 500 rose 3.4% and 4.9%, respectively.

The other precious metals were also sharply higher. Silver added 1.8% while platinum and palladium leapt 5.8% and 5.1%, respectively.

At the Comex close: December gold gained $40 to $1,753.70; December silver added 38 cents, to $21.70; January platinum surged $57.50 to $1,055; and December palladium advanced $95 to $1,954.20 an ounce.