Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose another 0.6% to close above $1,980 as geopolitical turmoil and soft US data continued to propel investors into safe-haven assets, while comments from Fed Chair Jerome Powell fueled hopes that rate hikes might be over. It was the metal’s third straight day of gains and seventh out of the past nine.

Israel hammered Gaza with more air strikes in retaliation for Hamas’ brutal incursion, deepening the crisis and increasing the possibility that it could trigger the involvement of Iran or its allies, dramatically increasing the scope of war.

Oil prices jumped again, with US benchmark WTII crude adding another 1.2%, as traders grow increasingly worried that Iran could interfere with the Straight of Hormuz, disrupting crucial Middle East supply lines. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The US leading economic indicators index dropped 0.7% in September for its 18th straight month in the negative. A composite of 10 metrics design to show whether the economy is getting better or worse, the LEI typically—but not necessarily currently—foreshadows recession when it has such a sustained losing streak.

US home sales plunged 2% in September to the lowest level since 2010 as sharply higher mortgage rates are stifling demand. With 10-year Treasury yields reaching 16-year highs near 5%, the average 30-year mortgage has risen to more than 6.9%.

The Philadelphia Fed gauge of region business conditions stayed in contraction in October for the second straight month and the 15th out of the past 17.

But not all the data was dour. First-time jobless claims fell last week to a nine-month low of 198,000, signaling relatively few layoffs in the economy. The Fed has been trying desperately to cool the red-hot labor market and thereby inflation with aggressive interest rate hikes.

Fed Chair Jerome Powell today cited the high demand for labor as one reason that additional monetary tightening might still be necessary. But he softened that line with more dovish signals, saying the Fed is “attentive” to the higher borrowing costs caused by sharply higher Treasury yields, and suggesting that current rate levels may continue to slow inflation with no more help from the Fed.

The dollar slid 0.3% against major rivals as traders clung to the dovish side of Powell’s comments. CME FedWatch now sees a 70% chance of no more rate hikes this year, compared to 50% before Powell’s speech. A falling dollar lifts gold by making it cheaper oversea.

The other precious metals were mixed, with silver and palladium sliding 0.3% and 1.4%, respectively, while platinum added 0.4%.

At the Comex close: December gold gained $12.20 to $1,980.50; December silver slipped 7 cents to $23.03; January platinum picked up $3.90 to $898.20; and December palladium dropped $15.50 to $1,118.50 an ounce.