Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.5% to close above $1,836 as Treasury yields and the dollar pulled back ahead of tomorrow's release of new Consumer Price Index data. It was the metal's fourth straight winning session.

Driven by tangled supply chains, a skewed labor market skewed, and roughly $5 trillion in pandemic relief sloshing through the economy, consumer inflation rose 7% in 2021, the most in 40 years.

The Fed has stated its intention to start raising interest rates in March to slow the steady climb in prices. The only question is how aggressively. All eyes will be on tomorrow's release of the January CPI report for new clues about the pace of tightening

Most forecasters expect prices to have risen 0.4% rise in January for an annualized rate of 7.2%. A stronger print could lead to faster and steeper tightening by the Fed, while a weaker one could mean a slower approach.

A pair of prominent Fed officials said today that they believe the worst is over. Atlanta Fed president Raphael Bostic said that prices are "on the cusp" of turning power, and Cleveland Fed president Loretta Mester said she also thinks inflation will ease this year.

Supply-chain improvements are beginning to be felt and inventories have been rebuilt in many sectors, adding a buffer against the shortages that caused prices to spike higher last year. Workers are returning to the job market, helping to moderate wage growth.

In the meantime, gold is being buoyed by demand for inflation hedges as global investors seek protection from loss of purchasing power.

Benchmark 10-year Treasury yields pulled back from a 30-month high near 2%, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar edged down 0.1% against major rivals, supporting gold and other commodities by making them less expensive in other currencies, boosting demand overseas.

The other precious metals were also higher, with silver adding 0.6% while platinum and palladium picked up 0.1% and 0.9%, respectively.

At the Comex close: April gold gained $8.70 to $1,836.60; March silver added 14 cents, to $23.34; April platinum picked up $1.10 to $1,037.40; and March palladium rose $22.90 to $2,285.10 an ounce.