Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 0.5% to close under $1,777 after hawkish comments from Fed Chair Jerome Powell reversed an early-session rally driven by weak US data and concerns about the Omicron variant. The metal had risen above $1,811 before retreating into a monthly decline of 0.4%.

Speaking to the Senate Banking Committee, Powell said the Fed will consider accelerating its taper of quantitative easing when it meets in December, citing the strong economy and high inflation as reasons to end the emergency program earlier than planned.

The Fed voted in November to reduce its $120 billion-per-month easing program by $15 billion, with similar reductions expected monthly. Most Fed watchers believe the amount is likely double to $30 billion per month, ending the program by March.

The end of QE is considered a prerequisite for raising interest rates, the Fed's favorite tool for combating inflation.

Gold was rallying strongly for most of the session, picking up around 1.3% before Powell's comments reversed the trade. Tighter monetary policies typically strengthen the dollar and lift bond yields, both of which weigh on the gold price.

Safe-haven demand drove the initial gains for gold after Moderna CEO Stéphane Bancel said current vaccines will be less effective against the Omicron variant. Separately, Regeneron and Lilly said their antibody treatments for covid are likely to be vulnerable because of mutations in its spike proteins.

Adding to risk off sentiment, the Chicago PMI for business condition dropped in November to the lowest level in nine months and the Conference Board's gauge of consumer confidence also tumbled to nine-month low. Inflation and renewed pandemic concerns were the drivers in both cases.

The downbeat data, variant news, and taper talk all combined to hammer Wall Street. The Dow and S&P 500 lost 1.9% each while the Nasdaq fell 1.6%.

Gold's late slide was backstopped by a weaker dollar, which fell sharply against safe-haven currencies like the yen and Swiss franc. A falling dollar supports gold and other commodities by making the less expensive in other currencies.

The other precious metals were also lower for the day and month. Silver slid 0.2% for a monthly decline of 4.7%. Platinum tumbled 3.9% today and 9.2% this month. Palladium shed 4.7% for a whopping monthly loss of 13.9%.

At the Comex close: February gold fell $8.70 to $1,776.50; March silver dipped 4 cents to $22.82; January platinum dropped $37.20 to $927.30; and March palladium jettisoned $83.70 to $1,705.50 an ounce.