Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to close above $1,732 after the Fed's dovish message after yesterday's meeting boosted demand for the meal as an inflation hedge despite a sharp spike in bond yields.

The Federal Reserve reaffirmed its extremely dovish stance, pledging to keep interest rates near zero into the end of 2023 and continue quantitative easing in the amount of $120 billion per month for an indefinite period.

The extremely accommodative policy statement came despite rising inflation and substantially improved prospects for the economy because of accelerating vaccinations. Many analysts were expecting some signals of early tightening to choke off rising prices. None was forthcoming.

Treasury yields continued to climb today, with benchmark 10-year yields temporarily pushing above 1.75% for the first time in 15 months. While the rising yields can pressure gold by increasing the opportunity cost for holding the meal instead of bonds, gold and yields rose together as investors bet that the dovish Fed will lead to substantially higher inflation.

Stocks retreated on the rising yields, which can increase borrowing costs for individuals and businesses despite low rates from the Fed. Gold received some support from this rotation out of risk assets.

Capping gold's gains, the dollar added 0.4% against major rivals behind higher yields and rising optimism about the US recovery. A stronger dollar weighs on gold by making it pricier overseas.

The other precious metals were also higher, with silver climbing 1.1% while platinum and palladium rose 1.5% and 4.9%, respectively.

At the Comex close: April gold gained $5.40 to $1,732.50; May silver climbed 29 cents to $26.35; April platinum added $18.20, to $1,217.50; and June palladium jumped $124.50 to $2,662.80 an ounce.