Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinExtending yesterday's slide, gold fell another 1% to close at $1,841 as Fed jawboning combined with falling oil and a rising dollar to keep the metal under pressure. The two-day drop of 2.3% has pushed it to the lowest finish in three months.

Ahead of tomorrow's release of the April Consumer Price Index, a slew of Fed officials spoke today to reinforce the message that they must further tighten monetary policy to tame inflation. Fed Gov. Christopher Waller called for aggressive "front-loading" of rates while New York Fed President John Williams vowed to "cool down the demand side of the equation."

Separately, Cleveland's Loretta Mester admitted that the Fed "isn't ruling out 75 basis point moves forever," apparently pushing back on Fed Chair Jerome Powell's statement last week that such moves are not being "actively considered."

At the same time, the central bankers tried to quell growing concerns that an aggressive Fed will tip the economy into recession. Richmond Fed President Tom Barkin said the Fed does not need to engineer a "Volker-like recession." Waller said something similar.

But these statements were perhaps damning with faint praise. Fed Chair Paul Volker's aggressive rate hikes in the early 1980s triggered the worst downturn since the Great Depression, driving unemployment to 11%.

Bond traders seemed unconvinced by the reassurances, pouring back into benchmark 10-year Treasurys and pushing yields back under 3%.

The dollar rose 0.2% on the prospect of higher rates, pressuring gold and other commodities priced in it for global trade by making them more expensive in other currencies.

Falling oil prices further weighed on the metal. WTI crude dropped another 3.7% to under $100 per barrel following weak Chinese trade data and tightening Covid lockdowns in Shanghai. Gold often trades in sympathy with oil as a hedged against energy-related inflation.

The other precious metals were mostly lower, with silver and palladium falling 1.8% and 0.9%, respectively, while platinum picked up 0.9%.

At the Comex close: June gold fell $17.60 to $1,841; July silver lost 40 cents to $21.42; July platinum added $8.70, to $947.20; and June palladium slid $17.80 to 2,043.70 an ounce.