Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.7% to close under $1,823 after higher consumer inflation spurred a sharp rise in bond yields and the dollar, pressuring alternative stores of value.

The Consumer Price Index surged 0.8% in April behind pandemic-related supply shortages and rising demand for goods and services as vaccinations accelerate and society reopens. It was the biggest monthly rise in the CPI since 2009. Year-over-year inflation rocketed from 2.6% in March to 4.2% in April, the highest level since 2008.

Separately, real earnings–or earnings adjusted for inflation–were flat in April.

Benchmark 10-year Treasury yields jumped to a two-week high above 1.69% as investors dumped lower-yielding bonds to prevent erosion in returns for tying up money for long periods.

Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset. But rising inflation is typically supportive for gold in the longer term in its traditional role as an inflation hedge.

The dollar rallied 0.7% on the CPI data on speculation that the Fed will be forced to choke off inflation by raising interest rates prematurely. Money markets have priced in a quarter-point increase by December 2022, nearly a year before Fed guidance. A stronger dollar pressures gold by making it more expensive in other currencies.

Helping to limit gold's drop, US equities stumbled, with all three major indexes losing more than 2%.

The other precious metals were also lower, with silver dropping 1.5% while platinum and palladium lost 1.2% and 2.6%, respectively.

At the Comex close: June gold slid $13.30 to $1,822.80; July silver fell 42 cents to $27.24; July platinum lost $15.30 to $1,225.90; and June palladium shed $77.20 2.6% to $2,849 an ounce.