Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rocketed 4.1% higher to close near $1,753, its highest finish since October 2012, as the Federal Reserve unleashed another unprecedented barrage of monetary stimulus, weakening the dollar and lifting alternative stores of value. With US markets closed tomorrow for Good Friday, the metal ended the shortened week with a gain of 7%.

The Fed unveiled a radical $2.3 trillion program to pump cash into local governments and small and mid-sized businesses, venturing further into uncharted waters to save the economy from collapse. In a new form of quantitative easing, the central bank will now purchase municipal bonds and lower-grade corporate bonds, including so-called junk bonds, to keep money flowing.

The additional Fed program comes after it already slashed interest rates to near zero for the first time since the 2008 financial crisis, and announced unlimited quantitative easing in late March. Tantamount to printing money, QE floods the financial system with cash to promote lending and spending.

The new program arrives after another 6 million Americans filed for first-time unemployment benefits for the second straight week, bringing the three-week total to nearly 17 million.

The dollar fell broadly after the announcement, dropping 0.6% against major rivals as traders speculate that the central bank is not finished expanding the money supply to battle the coronavirus.

Gold thrives in this environment. Negative real interest rates eliminate the opportunity cost for holding the metal, which provides no yield of its own, instead of bonds; meanwhile, investors flock to it as a proven hedge against currency debasement and the risk of sharply higher inflation. After three rounds of limited QE following the financial crisis, gold surged to its all-time high above $1,900 in 2011.

The other precious metals were also higher, with silver jumping 5.6% for a weekly rise of 9.6%. Platinum and palladium rose 2% and 0.7%, respectively, for the session.

At the Comex close: June gold leapt $68.50 to $1,752.80; May silver climbed 85 cents to $16.05; July platinum gained $15 to $748.60; and June palladium picked up $14.80 to $2,110 an ounce.