Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.5% to close just above $1,856 as pandemic concerns in Europe and Asia lifted the dollar, undercutting demand for alternative stores of value. But the metal still ended the week with a gain of 1.4%, buoyed by expectations that the Biden administration will supply more fiscal stimulus.

China has introduced new pandemic restrictions after new cases were reported for the first time in several months. Hong Kong has announced its most drastic restrictions in more than a year because of new COVID-19 cases. And lockdowns in the eurozone and UK are expected to drag on for several months.

With pandemic restrictions taking their toll, the IHS Markit flash PMI for the eurozone fell for the third straight month in January, with most businesses reporting contractions in activity. A similar survey in Britain revealed business activity has fallen to an eight-month low, putting the UK economy on pace for a sharp contraction in the first quarter.

Meanwhile, the US economy is showing remarkable resilience in the face surging infections and rising unemployment. The IHS Markit PMI surveys for both services and manufacturing jumped in January, with the services sector, by far the largest portion of the economy, rising to a two-month high.

Prices for raw materials are beginning to rise, however, as COVID-related shortages and production bottlenecks have started choking supply chains again.

The dollar bounced off recent lows as Forex traders shifted away from risker currencies to the relative safety of the US. The buck still lost 0.6% this week, supporting gold and other commodities priced in it for global trade by making them less expensive overseas.

For the week, gold rose in reaction to changes in Washington. With Democrats in control of the White House and both chambers of Congress, investors are expecting huge transfusions of fiscal spending for the economy, increasing the risk of sharply higher inflation. Gold is often sought as a hedge against inflation and currency debasement.

The other precious metals were lower for the day and mixed for the week. Silver fell 1.2% today but gained 2.8% this week. Platinum dropped 1.5% but held a weekly gain of 2%. Palladium fell 0.4% today and 1.3% this week.

At the Comex close: February gold slid $9.70 to $1,856.20; March silver lost 30 cents to $25.56; April platinum dropped $16.40 to $1,111.60; and March palladium slipped $9.90 to $2,365.20 an ounce.