Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.5% to close under $1,975 for its first down session in six as an increasingly hawkish rate outlook lifted Treasury yields and the dollar, undercutting alternative stores of value. With US markets closed Friday for the Easter holiday, the metal ended the shortened week 1.5% higher.

New York Fed President John Williams said today that at half-point rate hike in May is a "reasonable option," adding his influential voice to the growing chorus of Fed officials promising aggressive action against inflation. He emphasized that the Fed needs to tighten "expeditiously" to get prices under control.

Separately, Cleveland Fed President Loretta Mester repeated her call for bigger hikes than usual and an early start on trimming the Fed's $9 trillion balance sheet, a process known as quantitative tightening.

Benchmark 10-year Treasury yields rebounded sharply above 2.8% on the hawkish views, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar rose 0.5% against major rivals and hit a two-year high against the euro after ECB chief Christine Lagarde suggested higher rates in the eurozone will not be coming soon. Potential fallout from the Ukraine crisis is making the ECB more cautious than other major banks. A rising dollar weighs on gold and other commodities by making them pricier in other currencies, limiting overseas demand.

While widespread monetary tightening creates headwinds for the gold, the metal continues to be supported by safe-haven investments because of the Ukraine war and demand for inflation hedges. In addition, with this week's CPI at 8.5% and benchmark yields still under 3%, real interest rates will remain solidly negative for the foreseeable future, adding to gold's attractiveness.

The other precious metals were mixed for the day and week. Silver dropped 1.3% today but rose 3.5% this week. Platinum slipped 0.5% but maintained a 1.9% weekly gain. Palladium picked up 0.7% but still lost 2.7% this week.

At the Comex close: June slid $9.80 to $1,974.90; May silver dropped 33 cents to $25.70; July platinum rose $4.60 to $994.20; and June palladium climbed $15.90 to $2,355.40 an ounce.