Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending last week's 2.1% rally, gold added another 0.4% to close above $1,844 as weakness in yields and the dollar increased demand for alternative stores of value. It was the metal's highest finish since early January.

ECB head Christine Lagarde assured the markets on Friday that quantitative easing will continue at current levels and warned that talk of reductions in support are premature. Lagarde's statements echo those made recently by Fed Chair Jerome Powell and a host of US central bankers.

Yields on sovereign debt retreated further as inconsistent recovery from the Covid-19 pandemic fuels ongoing commitment to monetary easing among global central bankers. Benchmark 10-year yields fell to a two-week low just above 1.6%, tracking lower with those of Germany, Italy, Japan, and the UK. The lower yields on government bonds support gold by reducing the opportunity cost for holding it instead of bonds.

The dollar fell 0.2%, languishing near a four-month low, as other major economies catch up to the US in pandemic recovery. A weaker dollar helps gold and other commodities by making them less expensive in other currencies, lifting demand overseas.

Oil prices surged, with WTI crude adding nearly 4% to more than $66 per barrel, after Secretary of State Anthony Blinken cast doubt on Iran's willingness to enter into a new nuclear agreement. Without a deal, sanctions will continue, reducing the supply of oil in the global market and buoying prices.

Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious meals were mostly higher, with silver and platinum rising 1.5% and 0.7%, respectively, while palladium slipped 1.6%.

At the Comex close: June gold gained $7.80 to $1,884.50; July silver rose 42 cents to $27.91; July platinum picked up $8.20 to $1,177.60; and June palladium dropped $45.20 to $2,729.80 an ounce.