Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinOne day after tumbling to a 30-month low, gold added 0.2% to close above $1,636 on bargain-hunting as the dollar stalled and oil prices rallied, buoying alternative stores of value. But hawkish messaging from Fed officials continued to hold the metal in check.

The dollar was little changed, hovering near 20-year highs against a basket of rivals, as the UK pound recovered slightly from yesterday's drudging. The sterling tumbled to a record low after new PM Liz Truss announced last Friday huge, unfunded tax cuts to spur growth. The euro also edged higher after its own 20-year low against the buck.

Dollar weakness is expected to be short-lived, however, with the prospect of further rate hikes from the Fed on the horizon. Chicago Fed president Charles Evans said today that rates, currently just above 3%, will need to reach as high as 4.75% this year to begin taming rampant inflation. A policy dove, Evans was advocating just weeks ago that rates peak at 4%.

Separately, St. Louis Fed president James Bullard warned high rates around 4.5% will have to be maintained for "some time" irrespective of recession risks.

Benchmark 10-year Treasury yields crept closer to 4%, a level not breached in 12 years, on the hawkish rate view. Rising yields pressure gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Helping to underpin the gold price, Wall Street slid further into bear territory on the dual prospects of global recession and higher interest rates. Down another 0.4%, the S&P 500 las lost 24% since its January peak to hit a two-year low.

Rebounding oil also helped gold. WTI crude bounced 2.3% off a nine-month low to close at $78.50 as Hurricane Ian slowed production at refineries in the Gulf of Mexico. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mixed, with silver and platinum down 0.8% and 0.4%, respectively, while palladium picked up 2%.

At the Comex close: December gold gained $2.80 to $1,636.20; December silver lost 14 cents to $18.34; October platinum dropped $3.20 to $846.90; and December palladium rose $41.40 to $2,090.40 an ounce.