Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.6% to close at a nine-month low under $1,732 as recession concerns in Europe rallied the dollar, pressuring alternative stores of value.

The Nord Stream 1 pipeline between Russia and Germany was shut down for annual maintenance today, interrupting flows of natural gas to Europe at least 10 days. Eurozone governments fear that Russia may extend the closure, or perhaps make it permanent, as punishment for Western support for Ukraine,

The euro eroded to its weakest level against the dollar since December 2002 on worries that an energy crisis could tip the region into recession. The dollar jumped 1% to new 20-year highs major rivals, lifted by the euro’s weakness and expectations of sharply higher US interest rates.

Last Friday’s unexpectedly strong US employment data, which showed 372,000 new jobs added to the economy in June, is expected to embolden the Fed to act aggressively in raising interest rates at its July meeting. Fed fund futures traders calculate a 93% likelihood of another hike of 75 basis points, with a 7% chance of a full 1% hike.

Higher interest rates lift the dollar by attracting Forex investment seeking higher yield. A strong dollar pressures gold and other commodities by making them more expensive in other currencies, limiting overseas demand.

The Dow and S&P 500 lost 0.5% and 1.2%, respectively, while the Nasdaq tumbled 2.3% as investors braced for Wednesday’s release of new consumer inflation data. A strong CPI print will likely push the Fed toward bigger rate hikes while raising the risk of recession.

Gold’s slide was backstopped by weaker Treasury yields as investors sought protection in government bonds. The yield curve between 2- and 10-year Treasurys remained inverted, signally high inflation expectations in the near term and low economic growth expectations in the longer term.

The other precious metals were mixed, with silver dropping 0.5% while platinum fell 2.5% and palladium rose 0.7%.

At the Comex close: August gold slid $10.60 to $1,731.70; September silver slipped a dime to $19.13; October platinum lost $22.10 to $860.70; and September palladium picked up $15 to $2,171.60 an ounce.