Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.5% to close near $1,764 as China signaled the possible easing of Covid restrictions, which traders interpreted as likely to lift demand in the world's biggest gold-buying nation. Downbeat US economic data and expectations of a smaller rate hike from the Fed in December also buoyed the metal.

After intensive unrest in major Chinese cities over draconian policies to contain surging Covid cases, China pledged to step-up vaccinations, especially of the elderly. The move is seen as step toward reducing the restrictions that have closed large segments of China's struggling economy and caused a wave of protests.

Stock markets in Hong Kong and China rallied hard on the news as investors expect that looser curbs will fuel economic growth and retail investing in equities and commodities, including gold.

US consumer confidence fell to a four-month low in November, according to the Conference Board index, as Americans become increasingly worried about recession. Rapid increases in interest rates by the Fed are intentionally slowing the economy to put downward pressure on the strongest inflation in 40 years.

Home prices fell for the third straight month in September, according to the authoritative Case-Schiller index. Mortgage rates have doubled from earlier this year, making homes less affordable, and the slower economy is beginning to undermine demand. Analysts expect much deeper price declines in coming months as the Fed keeps tightening.

Despite some hawkish comments from Fed members this week, a smaller rate hike is expected when the Fed meets in mid-December. Fed fund futures markets are pricing in a 69% probability of an increase of 50 basis points, with just a 31% chance of a fifth-straight hike of 75 basis points.

Smaller rates hikes are good for gold because they slow the march of bond yields, making gold more attractive by reducing the opportunity cost for holding it as a safe-haven asset.

The other precious metals were mostly higher, with silver and platinum picking up 1.5% and 0.9%, respectively, while palladium slipped 0.7%.

At the Comex close: February gold rose $8.40 to $1,763.70; March silver rose 31 cents to $21.44; January platinum added $9.30, to $1,008.60; and March palladium dropped $12.90 to $1,833.90 an ounce.