Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rallied 0.7% to close near $1,764 as the near-collapse of a major Chinese property company triggered fears of global financial contagion and stoked demand for safe-haven assets.

Evergrande, China's second-largest property developer, is expected to miss debt payments this week and next, putting it in danger of default within 30 days. A key player in China's heavily leveraged real-estate sector, which constitutes nearly 30% of the Chinese economy, Evergrande carries some $300 billion in debt owned by major financial companies around the world.

Worried that an Evergrande default could deepen the economic slowdown in China and even trigger a global debt crisis like the collapse of Lehman Bros in 2008, traders bailed out of risk assets in favor of safe-haven assets like US Treasury notes and gold.

The Dow, Global Dow, and S&P 500 all tumbled more than 1.7% on the default concerns while the Nasdaq dumped 2.1%.

Also supporting risk-off sentiment, the Fed begins its two-day meeting on monetary policy tomorrow. The central bank is widely expected to signal reductions in bond purchases, known as quantitative easing, to begin later this year. The Fed has been buying $120 billion in bonds every month during the pandemic, flooding the economy with cheap cash to promote lending and spending.

Benchmark 10-year Treasury yields suffered their biggest daily drop since August as investors snapped up government bonds. Yields move inversely to bond prices.

Capping gold's gains, the dollar edged up 0.1% against major rivals as Forex traders, too, sought safety. A rising dollar tends to weigh on gold and other commodities by making them pricier in other currencies.

The other precious metals were lower, with silver slipping 0.6% while platinum and palladium fell 3.4% and 5.9%, respectively.

At the Comex closed: December gold gained $12.40 to $1,763.80; December silver lost 13 cents to $22,20; October platinum fell $31.40 to $899.20; and December palladium tumbled $118.60 to $1,865.20 an ounce.