Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.4% to close above $1,323 as rising employment costs boosted demand for inflation hedges despite a stronger dollar. Bargain-hunting also lifted the metal, which finished the week down 1.1%.

The Employment Cost Index rose 0.8% in March, pushing the annualized increase in compensation costs for employers to 2.7%, the highest level in a decade. While wage-growth remains below average for a job market with 4.1% unemployment, its recent acceleration feeds expectation of sharply higher inflation in the near term. Gold often serves as a hedge against inflation.

GDP rose 2.3% in the first quarter. While beating expectations, it was nonetheless the weakest quarterly rise in a year and well short of Q4's 2.9% growth. Surging business spending could not offset a deep pullback in consumer spending, which rose by a meager 1.1%. Consumer spending constitutes roughly 70% of GDP.

The dollar added another 0.1% as traders speculated that rising inflationary pressures will induce the Fed to raise interest rates four times this year, despite forward guidance committing to three. Higher rates boost the buck by attracting foreign exchange monies seeking higher yields. The dollar finished the week 1.5% higher for its best week since November 2016, pressuring gold and other commodities priced in it for global trade by making them more expensive overseas.

Treasury yields pulled back for a second day despite rising wage inflation as investors found the 3% level notched earlier in this week an enticement to buy, bidding up prices and pressuring yields.

The other precious metals were mixed for the day and week. Silver dropped 0.4% for a weekly loss of 4.2%. Platinum added 0.7% today but fell 1.6% this week. Palladium surrendered 1.6% today and 6.5% this week, pressured by the relaxation of tensions with Russia, the leading producer.

At the Comex close: June gold gained $5.50 to $1,323.40; July silver slid 7 cents to $16.50; July platinum added $6.30, to $916.40; and June palladium fell $16.05 to $963 an ounce.