Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.4% to close above $2,026 on a weaker dollar and ongoing concerns about an expanding conflict in the Middle East. But the metal still ended the week 0.8% lower after upbeat US data and hawkish Fed speak dimmed the outlook for a March rate cut.

Consumer sentiment surged in January to the highest point since the summer of 2021, with Americans feeling better about the economy, their finances, and the prospect of falling inflation. It was the second impressive reading in a row for the University of Michigan index, although it remained well under pre-pandemic levels.

Following strong retail sales and jobless data this week, the consumer sentiment report prompted more Fed officials to talk down the prospect of quick rate cuts. Chicago Fed President Austan Goolsbee said today that more time is needed to determine when to change policy; San Francisco Fed President Mary Daly said its premature to think rate cuts are around the corner.

Several other central bankers have made similar comments recently, including Fed Governor Christopher Waller, Atlanta Fed chief Raphael Bostic, Cleveland Fed President Loretta Mester, and the New York Fed’s John Williams.

Fed fund futures traders now project a 47% chance of a March rate cut, down from 56% yesterday and as high as 80% last week. The odds of the first quarter-point cut happening at the May Fed meeting rose to 50%, up from 46% yesterday and just 17% last week, according to CME FedWatch.

Bond traders are also getting the hawkish message. Benchmark 10-year Treasury yields rose to the highest level since early December, just under 4.2%, on the shifting rate view. Higher yields are a headwind for gold because they increase the opportunity cost for holding it instead of bonds.

Helping gold higher today, the dollar fell 0.2% against major rivals. But the buck still gained 1% for the week, pressuring gold by making it pricier overseas.

Gold continued to be supported by safe-haven inflows after the US launched new strikes against Houthi forces yesterday, adding to fears of an expanding conflict in the region.

The other precious metals were mixed for the day and lower for the week. Silver fell 0.4% for a weekly loss of 2.4%. Platinum shed 0.5% today and 1.5% this week. Palladium picked up 0.5% but still lost 3% of the week.

At the New York spot close: gold added $7.90, to $2,026.50; silver dropped a dime to $22.60; platinum slid %=$5 to $907; and palladium rose $4.70 to $948.70 an ounce.