Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.2% to close under $1,818 in choppy trading as hawkish comments from Fed Chair Jerome Powell lifted the dollar, undercutting alternative stores of value. The rose above $1,839 mid-session before pulling back to finish at a two-week low.

Speaking at a European Central Bank policy conference in Portugal, Powell vowed to prevent the US economy from falling into a “higher inflation regime,” even if it means hampering growth. Controlling inflation “is highly likely to involve some pain” and may risk recession, Powell admitted, but the “bigger mistake” would be “to fail to restore price stability.”

Echoing Powell’s comments, ECB President Christine Lagarde said the prepandemic era of low inflation will not return, and the ECB must act now to counter its persistent underestimation of price growth.

The dollar rose 0.5% against major rivals on Powell’s hawkish view, pressuring gold and other commodities priced in it for global trade by making them more expensive in other currencies.

Benchmark 10-year Treasury yields retreated under 3.1% as bond traders, responding the Powell’s warning about slower growth, shifted toward the perceived safety of government bonds.

For now, gold investors are caught in crosscurrents. Higher interest rates are a headwind for gold because they strengthen dollar. But the recessionary risk of tighter monetary policy is supportive of the metal as a safe-haven asset. And gold is often seen as the go-to investment for preserving purchasing power in times of inflation.

The other precious metals were mixed, with silver dropping 0.6% while platinum and palladium added 0.5% and 4.6%, respectively.

At the Comex close: August gold slipped $3.70 to $1,817.50; September silver dropped 13 cents to $20.74, an 18-month low; October platinum rose $4.30 to $909.90; and September palladium picked up $84.70 to $1,946.60 per ounce.