Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rallied another 0.8% to close near $1,864, a fresh five-month high, as investors sought inflation hedges in the wake of yesterday's CPI release. It was the metal's sixth consecutive higher session.

With consumer inflation rising at an annualized 6.2% in October, the highest in more than 30 years, the markets are becoming concerned that the Federal Reserve may have lost control of price stability.

While some Fed members are pushing for tighter monetary policy, Fed Chair Jerome Powell has stuck to his narrative that higher prices are "transitory." San Francisco Fed President Mary Daly reiterated that message today, saying rates should remain near-zero for the time being.

The Fed announced last week that it will start unwinding its $120 billion per month easing program this month, with the goal of ending it entirely by mid-2022. But its most effective tool for combating inflation, a hike in its benchmark interest rate, is unlikely to happen until easing it finished next summer.

In the meantime, inflation expectations continue to climb, fueling aggressive demand for assets like TIPs, gold, and silver to hedge against loss of purchasing power.

Gold's gains came despite a stronger dollar, which adding 0.3% against major rivals on speculation that the Fed will have to raise rates quicker than it hopes. The buck has risen 1.5% to a 16-month high in the past two sessions following the hot CPI print.

Ordinarily, a stronger dollar weighs on gold by making t more expensive in other currencies, stifling overseas demand. But ravenous demand for hedges against inflation blowing right through this headwind, propelling gold higher by 1.8% in the past two sessions and more than 5% over the past six.

The other precious metals also gained, with silver adding 2.1% while platinum and palladium rose 1.6% and 1.2%, respectively.

At the Comex close: December gold climbed $15.60 to $1,863.90; December silver added 53 cents, to $25.30; January platinum picked up $17.50 to $1,094.50; and December palladium rose $23.70 to $2,062.60 an ounce.