Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched up less than 0.1% to close at $1,784 despite rising stocks as the Delta variant and China developments shifted the calculus on a Fed taper, pressuring the dollar and boosting alternative stores of value. The metal rose 0.3% for the week for its second straight weekly advance.

The aggressive Delta variant of the coronavirus is casting doubt on the prospects for US and global growth in the second half of the year. A growing number Asian and European nations are instituting new measures to curtail the spread, including mask mandates and restrictions on indoor dining, which have the potential to adversely affect commerce.

Goldman Sachs, one of the most consistently bullish forms on Wall Street, slashed its Q3 growth estimate from 9% to 5.5% because of the resurgent pandemic's likely impact on consumer spending and manufacturing production.

In addition, China's recently announced crackdown on the private sector is expected further to hamper growth in the world's second-largest economy. Industrial output, retail sales, and fixed asset investment were already weaker in July, according to government data.

Paradoxically, US equities rebounded on the souring outlook as investors began to discount the likelihood of a Fed taper this year. The Dow added 0.7% while the S&P 500 rose 0.8% and the tech-heavy Nasdaq 1.2%.

The Fed's monthly $120 billion in quantitative easing floods the economy with cheap cash to promote lending and spending, driving up corporate earnings. The minutes from its July meeting, released this week, showed the central bank leaning toward reducing stimulus by early 2022 at the latest.

However, given the pandemic's vehement return, weak China data, and the growing chaos in Afghanistan after the US withdrawal, this hawkish shift in policy no longer seems assured. Dallas Fed President Richard Kaplan, who last month argued for tapering QE as early as October, said today that the Delta variant's effect on the economy is making him rethink that position.

The dollar edged down 0.1% against major rivals on the potentially dovish shift, supporting gold and other commodities priced in it for global trade.

The other precious metals were mixed on the day and lower for the week. Silver dropped 0.5% for a weekly skid of 2.8%. Platinum rose 2.4% today but still lost 3.1% this week. Palladium fell 0.9% for a weekly decline of 14%.

At the Comex close: December gold added 90 cents, to $1,784; September silver slid 12 cents $23.11; October platinum gained $23 to $994.20; and September palladium lost $21.40 to $2,276.50 an ounce.