Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending last week's 5.5% rise, gold climbed another 0.4% to close near $1,777 despite upticks in yields and the dollar as traders remain hopeful the Fed will slow rate hikes in light of softer inflation. It was the metal's highest finish in three months.

Gold jumped last week after the October CPI showed consumer inflation weakening to 7.7%, the lowest since January, while the core rate, less food and energy costs, dropped to 6.3%.

The softer inflation data caused traders to speculate that the Fed might reduce the size and frequency of interest rate increases going forward. The dollar fell 3.8% on Thursday and Friday for its biggest two-day selloff in 14 years. A weaker dollar lifts gold by making it less expensive overseas.

The buck rebounded 0.4% today on bargain-hunting but gold rose anyway on dovish speculation. Fed funds futures traders now place the odds of a 75-basis-point hike in December at less than 20%. It was nearly 50% a week ago and 70% a month ago.

Comments form a pair of prominent Fed officials reinforced the outlook. Fed Vice Chair Lael Brainard on Monday joined Governor Christopher Waller separately indicated the Fed is ready to begin small rate increases while emphasizing its unwavering commitment to fighting inflation.

Benchmark 10-year Treasury yields also edged up slightly after last week's retreat to reclaim 3.85%.

The other precious metals were mostly higher, with silver and palladium gaining 2.1% and 0.6%, respectively, while platinum slid 0.5%.

At the Comex close: December gold gained $7.50 to $1,776.90; December silver added 45 cents, to $22.11; January platinum slid $5.10 to $1,033; and December palladium picked up $13 to $2,039.50 an ounce.