Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.6% to close near $1,930 as slowing inflation and cooling consumer spending raised questions about how aggressive the Fed will be in raising interest rates. But the metal still lost 2.7% for the month and 2.9% for the quarter, its first quarterly loss since Q3 2022, on a generally hawkish rate outlook.

The Fed's preferred gauge, the Personal Consumption Expenditures index, rose merely 0.1% in May, dropping the annual inflation rate down from 4.3% to 3.8%, the lowest since April 2021. The core rate, less volatile food and energy costs, rose 0.3% for the month to pull the annual rate down to 4.6%.

Separately, the government reported that consumer spending increased by a scant 0.1% last month, less than forecast. Consumer spending is the primary driver of the economy, contributing roughly 70% of GDP.

The University of Michigan consumer sentiment index climbed to a four-month high in June, however, as Americans felt relieved about easing inflation and the end of the debt-limit fight in Washington. But at 64.4, the index reading remains weak by historical standards.

Benchmark 10-year Treasury yields pulled back as traders weighed the effect of the softer PCE and consumer spending on the Fed's upcoming policy decisions. But yields still ended the week with substantial gains after Jerome Powell and other officials signaled more rate hikes to come.

Higher interest rates translate into higher bond yields, which pressure gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking lower with yields, the dollar fell 0.4% against major rivals, supporting gold and other commodities by making them less expensive overseas. The buck was virtually flat for the week.

The other precious metals were mixed for the day but lower for the quarter. Silver added 1% today and 3% this week but dropped 2.4% for the quarter. Platinum picked up 0.7% but tumbled 9% this quarter. Palladium slipped 0.5% for a quarterly loss of 16.8%.

At the Comex close: August gold gained $11.50 to $1,929.40; September silver added 22 cents, to $23.02; October platinum increased $6.40 to $913.20; and September palladium lost $5.40 to $1,222 an ounce.