Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending last week's 1.3% rise, gold added 0.4% to close above $2,033 on expectations that the Fed has concluded the most aggressive rate-hike cycle in 40 years. It was the metal's fourth gain in the past five sessions.

At the end of last week's Fed meeting, Jerome Powell signaled that the central bank is likely done after raising interest rates. Fed fund futures traders agree. According to CME FedWatch, the likelihood stands at 90% that the Fed will pause June, with a 72% chance of at least one rate cut by September.

This week's release of consumer inflation data should provide additional clues about the direction on monetary policy.

The markets have all but ignored Friday's higher-than-expect nonfarm payrolls report showing 253,000 jobs added in April, focusing instead on alarming instability in the US banking sector.

Following the abrupt recent failures of megabanks like SVB and First Republic, a series of regional banks regional banks are struggling with bad debt as the consequence of sharply higher interest rates over the past year. Chicago Fed President Austan Goolsby said today that a credit squeeze is apparently starting. Tighter credit impedes business growth, adding to recessionary risks.

Limiting gold's gains, benchmark 10-year Treasury yields crept toward 3.5%, supported by last week's quarter-point rate hike. Higher yields pull investors towards bonds and increase the opportunity cost for holding gold, a non-yielding asset. The dollar was nearly flat.

The other precious metals were mixed, with silver slipping 0.4% while platinum and palladium rose 1.8% and 5.2%, respectively.

At the Comex close: June gold gained $8.40 to $2,033.20; July silver slipped 10 cents to $25.83; July platinum rose $19.40 to $1,087.70; and June palladium climbed $76.60 to $1,563.40 an ounce.