Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.5% to close near $1,969 ahead of the Fed's rate decision as falling wholesale inflation pressured the dollar and yields, boosting alternative assets. The metal then gave up most of those gains in electronic trading after the Fed paused rates but signaled additional hikes to come.

As measured by the producer price index, US wholesale prices fell 0.3% in May, pushing the annual rate down to 1.1%, the lowest reading since December 2020. The so-called core PPI, excluding food and fuel, fell to an annualized 2.8%, the lowest since February 2021.

Wholesale inflation often foreshadows future trends in consumer inflation.

Benchmark 10-year Treasury yields fell under 3.8% on the PPI print as traders speculated that the Fed would almost certainly hold rates steady. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

But yields crept back above 3.8%, pressuring gold, after the Fed announced that it would, indeed, skip an increase this month but resume its rate-hike cycle in future meetings.

In the policy statement accompanying its decision, the central bankers said inflation is likely to remain elevated above its 2% target because of solid growth in the economy and a persistently strong labor market. Its dot-plot graph of forward guidance showed two more quarter-point increases this year.

The dollar dropped 0.3% before the Fed decision and held most of those losses after it.

The other precious were mostly higher, with silver and palladium rising 1.2% and 3.2%, respectively, while platinum slid 0.2%.

At the Comex close: August gold gained $10.30 to $1,968.90; July silver added 28 cents, to $24.11; July platinum dipped $1.90 to $980; and September palladium picked up $43.60 to $1,402.20 an ounce.