Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.6% to close above $2,052 as yields and the dollar fell on expectation that the Fed will pivot to rate cuts before Europe and Japan. Safe-haven inflows because of a new conflict in the Middle East also boosted the metal.

The Bank of Japan elected to continue its ultra-loose monetary policies, including negative interest rates, and make no changes in its extremely dovish forward guidance at its December meeting.

The dollar promptly rallied against the yen but fell against other major rivals, pushing the dollar index down 0.4%. Traders expect the Fed to begin cutting interest rates as early as March while the Bank of England and the European Central Bank both signaled recently that they will maintain current rate levels indefinitely.

A falling dollar lifts gold and other commodities by making it less expensive in other currencies supporting demand overseas.

Benchmark 10-year Treasury yields retreated in sympathy with Japanese yields on the BOJ announcement, hovering near the lowest levels since last July. Falling yields lift gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The US announced a naval coalition to combat recent attacks on commercial shipping in the Red Sea by Iran-backed Houthi fighters out of Yemen. The growing conflict added to safe-haven buying on concerns that international trade could be disrupted.

US benchmark WTI crude jumped another 1.5% on worries about supply disruptions in the Middle East. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also higher, with silver rising 21 cents while platinum and palladium picked up 1.2% and 3.5%, respectively.

At the Comex close: February gold gained $11.60 to $2,052.10; March sliver added 21 cents, to $24.32; January platinum rose $11.50 to $965.80; and March palladium climbed $41.50 to $1,240.90 an ounce.