Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold recouped 0.6% to close near $1,734 as weakness in bond yields and the dollar boosted demand for safe havens, drawing bargain-hunters into the market after yesterday's slide to a nine-month low.

US Treasury yields retreated from the one-year high hit last week, lifting prices, as another Fed official stepped forward to push back against fears of any premature tightening of monetary policy.

Fed Governor Lael Brainard warned today that "the economy remains far from our goals" for both employment and inflation. While a "burst" of inflation is expected as the recovery gains traction, it is likely to be transitory and will not encourage monetary tightening, she said in a talk with the Council on Foreign Relations.

Brainard joins Fed Chair Jerome Powell, Vice Chair John Clarida, and regional Fed Presidents James Bullard and John Williams in vocalizing recent assurances that monetary policy will be extremely accommodative for years to come, with interest rates scheduled to remain near zero through 2023.

Upbeat US data and vaccine rollouts have combined with the likelihood of more fiscal stimulus to spark concerns that rising inflation will prompt the central bank to tighten interest rates ahead of schedule. This expectation had lifted Treasury yields and strengthened the dollar in recent sessions while weighing on gold.

Higher bond yields create a headwind for gold in the short term by increasing the opportunity cost for holding it instead on bonds as a safe-haven asset. But rising inflation expectations, which have been a main driver behind the recent bond selloff, is typically supportive for gold in the longer term in its traditional role as an inflation hedge.

Responding to falling yields, the dollar fell 0.3% against major rivals, lifting gold and other commodities by making them less expensive in other currencies.

The other precious metals were also higher, with silver and palladium rising 0.8% while platinum 1.9%.

At the Comex close: April gold gained $10.60 to $1,733.60; May silver picked up 20 cents to $26.88; April platinum climbed $23.10 to $1,214.40; and June palladium added $19.60, to $2,368.60 an ounce.