Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to close above $1,681 as rising geopolitical tensions and weak US data lifted safe-haven demand despite higher Treasury yields and a stronger dollar.

Vladimir Putin announced yesterday that he will escalate the war on Ukraine with a partial mobilization of the Russian people, calling up 300,000 reservists to replenish his decimated military. He is also accelerating sham votes in occupied portions of Ukraine to annex them to Russia.

Most alarming, Putin warned that he will resort to Russia's full arsenal, which would include tactical nuclear weapons, to "defend" these newly Russianized portions of Ukraine against the forces that are resisting his invasion.

Putin's desperate rise in saber-rattling comes after a series of humiliating setbacks in recent months as Ukrainian forces, backed by Western weaponry, have driven Russian troops from large sections of occupied territory.

Against this backdrop of boiling geopolitical uncertainty, the Fed raised interest rates by another 75 basis points yesterday and promised more big rate hikes to come. The increasingly hawkish stance comes despite the possibility, as Fed Chair Powell acknowledged after the meeting, that "this process will lead to recession."

Gold quickly popped up near $1,700 in electronic trade following Powell's bleak comments before pulling back somewhat on rate-driven strength in the dollar and yields. Today, safe-haven demand overcame those headwinds to give gold its second straight day of gains.

Meanwhile, the Leading Economic Indicators index fell 0.3% in August, underscoring the reality of Powell's admission by "potentially signaling a recession," according to the Conference Board. A gauge of 10 indicators showing whether the economy is getting better or worse, the LEI has now declined for six straight months.

Benchmark 10-year Treasury yields climbed to 3.7%, an 11-year on the hawkish rate view, capping gold's rise by increasing the opportunity cost for holding it instead of bonds.

And the dollar tracked 0.6% on the growing rate differential between the US and other major economies. A stronger dollar weighs on gold and other commodities by making them costlier overseas.

The other precious metals were mixed with silver rising 0.7% while platinum fell 1.1% and palladium climbed 2.4%.

At the Comex close: December gold gained $5.40 to $1,681.10; December silver added 14 cents, to $19.62; October platinum dropped $10 to $906; and December palladium picked up $51.30 to $2,174.80 an ounce.