Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold added another 0.4% to close above $1,942 as yields and the dollar receded further on weakening equities, recession worries, and bets that the Fed will go easier with interest rates in coming months. It was the metal's fifth straight winning session and highest finish in nine months.

Wall Street wobbled after corporate earnings came in weaker than expected, reinforcing concerns that the economy is slowing under the weight of aggressively higher interest rates. Nasdaq sipped 0.2% while the Dow and S&P 500 hovered between small gains and losses.

Benchmark 10-year Treasury yields pulled back under 3.45% as investors sought refuge in the perceived safety of government bonds. Falling yields lift gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

With many forecasters projecting the US to slide into recession in 2023—if it isn’t there already, traders are increasingly betting that the Fed will respond by raising interest rates in smaller and fewer increments going forward. After four straight hikes of 75 basis points and one of 50 over the past five Fed meetings, Fed fund futures puts the odds of a 25-basis-point hike next week at 99.8%.

The dollar fell again, giving up 0.3% against major rivals on growing expectations that the Fed will become less aggressive than its peers, especially the ECB. While US economic data has been consistently weak, Eurozone data has been stronger this month, suggesting that the ECB will need to tighten monetary policy further than the Fed to stifle inflation.

Higher rates outside the US make other currencies more attractive to Forex traders, weakening the dollar. A falling dollar, in turn, helps gold and other commodities by making them less expensive overseas.

The other precious metals were mixed, with silver rising 0.8% while platinum and palladium, more closely tied to industry, slid 1.9% and 2.7%, respectively.

At the Comex close: February gold gained $7.20 to $1,942.60 March silver prices rose 19 cents to $23.94; April platinum lost $20.70 to $1,046.10; and March palladium shed $47.60 to $1,687.90 an ounce.