Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged up slightly to close at $1,650 during regular trading ahead of the Fed's decision on interest rates. The metal then jumped above $1,669 in electronic trade on a dovish policy statement, only to tumble to $1,640 on hawkish comments from Jerome Powell.

The Federal Reserve, as widely expected, raised interest rates by another 75 basis points in its uphill battle to combat the strongest inflation since the 1980s. It was the fourth consecutive increase of this size and the sixth hike this year.

Somewhat unexpected, however, was the relatively dovish language in the accompanying policy statement. The central bankers hinted that they might take a wait-and-see stance towards future rate hikes, recognizing "the lags with which monetary policy affects economic activity."

The dovish bone had little meat but the markets bit anyway. Benchmark 10-year Treasury yields immediately fell back to near 3.9%, the dollar dropped sharply against major rivals, US equities markets jumped, and gold rallied—all on the mere suggestion of relief from the most aggressive rate-hike regimen in four decades.

Fed Chair Jerome Powell quickly dashed those hopes. In his post-meeting press conference, Powell acknowledged that "it will be appropriate to slow the pace of increases" at some point." But clearly not yet, and when it does happen, interest rates are likely to be "higher than previously expected."

The markets abruptly reversed their earlier trades. 10-year yields pushed up near 4.1%, the dollar rallied to from losses to a gain of 0.3%, and gold slipped back toward $1,640.

Equities took it the hardest, with the Dow losing 1.6% while the S&P 500 fell 2.5% and the Nasdaq 3.4%.

The other precious metals were mixed. Silver went from dropping 0.4% at the close to 1.3% after Powell's tough talk. Platinum rose 0.1% before falling 0.7%. Outlier palladium improved from losing 1.4% to losing 1%.

At the Comex close: December gold added 30 cents, to $1,650; December silver slid 7 cents to $19.58; January platinum picked up 40 cents to $950.90; and December palladium fell by $26.90 to $1,850.10 an ounce.