Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.5% to close just under $1,815 after a stronger-than-expected CPI reading boosted demand for inflation hedges despite a stronger dollar.

The Consumer Price Index jumped 0.9% in June, nearly twice most forecasts, as travel-related expenses and the price of used cars soared again. The 12-month rate of consumer inflation surged to 5.4%, the biggest increase since 2008.

Wall Street pulled back on the data, with all three major indexes dropping around 0.3%. Treasury yields ticked higher, with benchmark 10-year yields adding around seven basis point to push back above 1.4%.

Higher yields are typically a headwind for gold because they increase the opportunity cost for holding it instead of bonds as a safe-haven asset. But hunger for inflation hedges outweighed this minor increase in cost for many investors.

Limiting gold's gains, dollar jumped 0.5% against major rivals on speculation that the Fed will be pressured to raise interest rates more quickly than previously thought. The CME FedWatch tool, which tracks trading in Fed find futures, is pricing-in a 74% likelihood of a rate hike by December 2022.

Fed officials came down on both sides of the question about how the Fed should respond. St Louis Fed President James Bullard said the time has come to begin withdrawing monetary stimulus by reducing the bond-buying program, known as quantitative easing, sometime this year. Meanwhile, New York Fed President John Williams pushed back against the notion, saying the criteria have yet to be met.

The other precious metals were mostly lower, with platinum and palladium falling 1% and 0.6%, respectively, while silver edged up less than 0.1%.

At the Comex close: August gold gained $9 to $1,814.90; September silver inched up less than a cent to $26.25; October platinum dropped $11.80 to $1,112.30; and September palladium slid $26.80 to $2,843 an ounce.