Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.3% to close above $1,843 as the prospect of a tumultuous Brexit combined with stalled US stimulus and the raging pandemic to spur demand for safe-haven assets. The metal posted its second straight weekly rise, adding 0.2% since last Friday.

The US set new records for coronavirus cases, hospitalizations, and deaths this week, making it the worst week since the pandemic began by all three metrics. Most health experts expect hospitalizations and deaths to accelerate in coming weeks.

Against this urgent backdrop, approval of the long-awaited, bi-partisan $900 billion stimulus package was delayed again after Senate Majority Leader Mitch McConnell rejected the inclusion of funding for state and local governments.

UK Prime Minister Boris Johnson and EU president Ursula von der Leyen conceded that Britain is likely to leave the Union without a trade pact at the end of the month. Absent a deal, Britain's GDP and per-capita income is projected to fall by 3% to 4% over the next decade, with the EU's falling less than 1%.

The dollar rose on safe-haven inflows, capping gold's gains, as the pound faltered on the prospect of a no-deal Brexit. Gold and the dollar typically trade inversely, as gold is denominated in dollars for global trade and therefore becomes costlier in other currencies when the dollar rises, dulling overseas demand.

Treasurys rose alongside gold on flights to safety, knocking yields lower. Falling bond yields support gold by reducing the opportunity cost for owning the metal, which provides no yield itself.

Wholesale inflation edged up 0.1% in November, the least amount in seven months, as the economy struggled against the resurgent coronavirus. However, the CRB commodity index rose by 11%, indicating stronger inflation in the pipeline for coming months.

The other precious metals mixed for the day and down for the week. Silver traded unchanged today but fell 0.7% this week. Platinum dropped 0.6% for a weekly decline of 4.8%, while palladium slid 0.1% today and 1.1% this week.

At the Comex close: February gold gained $6.20 to $1,843.60; March silver was flat at $24.09; January platinum slid $5.90 to $1,021.80; and March palladium dipped $2.40 to $2,333.10 an ounce.