Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.1% to close at $1,824 as Treasury yields pulled back despite sharply higher wholesale prices, lifting demand for the metal as a hedge against inflation.

The US Producer Price Index jumped 0.6% in April, more than forecast, as Covid-related supply shortages drove up the cost of many farm crops, raw materials, and finished goods used to produce consumer items.

One day after consumer inflation posted its biggest annual rise since 2008 at 4.2%, the wholesale inflation for the past 12 months increased to 6.2%, the most since 2009, signaling yet higher consumer prices in the pipeline.

Prominent Fed members have stepped forward to reassure the markets that the cash spigots will continue to flow. Richard Clarida, the Fed's Vice Chair, said yesterday that the central bank will need to see "substantial further progress" in job growth before considering tighter policies.

Striking a similar note, Fed Governor Christopher Waller said today that inflation will unwind once the global recovery hits its stride, and the US economy needs continued support in the meantime.

Despite the wholesale inflation print, benchmark 10-year Treasury yields pulled back slightly from five-week highs as traders digested the Fed's reassurances. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Wall Street shrugged off the PPI data, rebounding sharply from yesterday's sell-off. The Dow and S&P 500 both added 1.6% while the Nasdaq rose 1%.

The other precious metals were mixed, with silver and platinum sliding 0.7% and 1.6%, respectively, while palladium rose 0.6%.

At the Comex close: June gold added $1.20, to $1,824; July silver slid 19 cents to $27.06; July platinum fell $19.40 to $1,206.50; and June palladium picked up $15.60 to $2,864.60 an ounce.