Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending its rally to a third session, gold added another 0.2% to close at $1,829, a fresh one-month high, as mixed data and dovish testimony from Jerome Powell pressured bond yields.

Testifying to Congress for a second day, the Fed Chair reinforced his message that the recent spike in inflation will pass, and monetary policy will remain extremely accommodative for the foreseeable future. The labor market is still "a ways off" from where it needs to be before quantitative easing is tapered or interest rates are increased, Powell said.

Separately, Chicago Fed President Charles Evans said in a podcast that inflation will diminish as supply-line shortages recede, and that the central bank should postpone discussions of reducing QE until the end of the year.

Treasury yields fell further on the dovish messages, with the benchmark 10-year yield dropping below 1.3%.

Concerns about slowing global growth because of the Delta Covid variant also stoked demand for safe-havens, pressuring yields. Lower yields support gold by reducing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Meanwhile, mixed US economic data raised some uncertainty over the short-term course of the recovery. The Philly Fed manufacturing index fell in July, while the New York Fed index rebounded from a dramatic tumble in June.

Prices on imported goods rose another 1% in June, adding to short-term inflation.

Capping gold's gains, the dollar picked up 0.2% after first-time jobless claims fell to a pandemic low last week. A rising dollar weighs on gold and other commodities by making them more expensive in other currencies.

The other precious metals were mixed, with silver and platinum picking up 0.5% and 0.9%, respectively, while palladium fell 3.4%.

At the Comex close: August gold added $4, to $1,829; September silver climbed 12 cents to $26.39; October platinum rose $9.60 to $1,137.70; and September palladium dropped $97 to $2,729.30 an ounce.