Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.3% to close above $1,913 as prospects for additional stimulus and resulting inflation lifted demand for alternative stores of value despite rising equities, bond yields, and the dollar.

With Democrats in control of Congress and the White House, traders speculate that deeper pandemic stimulus and new infrastructure programs, along with the rollout of vaccines, are all but certain to fuel economic growth in 2021.

Wall Street rallied sharply on the prospect, with the Dow adding 0.7% while the S&P 500 and Nasdaq jumped 1.5% and 2.5%, respectively, to reach new record highs.

Bond yields continued to climb, with the 10-year Treasury yield reaching the highest level since last March, on expectations that all the additional deficit spending from the US government will stoke inflation.

The dollar also rallied against major rivals, adding 0.3% behind rising bond yields on hopes for an economic rebound in the US. A rising dollar typically weighs on gold and other commodities by making them pricier in other currencies.

Despite these headwinds, gold rebounded partially from yesterday's slide as investors weighed the prospects of a deepening pandemic and higher long-term inflation, stoking demand for the metal as both safe-haven asset and inflation hedge.

Comments from Fed officials supported these views. Philadelphia Fed President Patrick Harker forecast a "significant slowdown, possibly even negative growth" in the first quarter because of damage from the pandemic. St. Louis Federal Reserve President James Bullard warned that supply constraints will result in "higher inflation than we're used to" in 2021.

The other precious metals were mostly higher, with silver and platinum rising 0.8% and 1.3%, respectively, while palladium slid 0.7%.

At the Comex close: February gold gained $5 to $1,913.60; March rose 22 cents to $27.26; April platinum picked up $14.40 to $1,124.60; and March palladium dropped $16.50 to $2,431.60 an ounce.