Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold added 0.2% to close near $1,740 as the dollar rally stalled and bargain-hunters re-entered the market after deep losses over the past two sessions.

In the minutes from its June meeting, released earlier this week, the Fed reaffirmed its aggressive stance toward monetary tightening. Committee members voiced their growing concern that inflation, already running at a 40-year high, could become entrenched in the economy if drastic measures are not taken soon, even at the risk of a “larger-than-anticipated” impact on economic growth.

The hawkish message added fuel to a dollar rally that was already propelled by slowing global growth, pushing the greenback to fresh 20-year highs through yesterday’s session. A stronger dollar pressures gold and other commodities by making it pricier in other currencies, stifling demand overseas. Gold fell 2.7% in two days.

Today, the dollar rallied stalled, however, and gold rebounded as investors in both markets realized recent movements were overdone. Increasing signs of recession at home and abroad are supporting safe-haven demand for the metal and limiting market expectations for further rate hikes.

Fed funds futures traders are now betting that slower growth will prevent the Fed from raising rates above 3.44% by March 2023. Expectations before the June meeting were for 4% by May 2023. Falling commodity prices over the past month are expected to blunt inflation growth, further capping rate hikes.

Wall Street also rebounded on bargain-hunting after several brutal sessions, with the Dow and S&P 500 adding 1.1% and 1.5%, respectively, while the tech-heavy Nasdaq picked up 2.2%. High-flying growth and tech stocks are more sensitive to interest rates prospects because their values are based on cash flows that are discounted by future borrowing costs.

The other precious metals were also higher. Silver picked up 0.2%; platinum rose 2.1%; and palladium jumped 5.1%.

At the Comex close: August gold rose $3.20 to $1,739.70; July silver added 3 cents, to $19.19; October platinum picked up $24.90 to $865.80; and September palladium surged $97.10 to $1,993.40 per ounce.