Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.8% to close under $1,738 as rising inflation expectations lifted Treasury yields and the dollar, undercutting demand for alternative assets. It was the metal's lowest finish since early August.

Jerome Powell told Congress today that inflation is likely to remain elevated in coming months. Supply-side bottlenecks have "gotten worse," the Fed chair admitted, and price-pressures are more enduring than the central bank expected.

Sharply higher energy prices are adding to inflation. With crude rising recently to three-year highs and the price of natural gas exploding because of shortages, factories in Europe and Asia are passing along higher costs to consumers.

Persistent inflation is taking its toll on US consumer confidence, which fell to a seven-month low in September because of rising prices and the aggressive spread of the Delta coronavirus variant. It was the second straight month of declines in the Conference Board survey.

Benchmark 10-year Treasury yields jumped back above 1.5% as bonds sold off because of growing inflation fears. Yields have been climbing since last week, when the Fed signaled reductions in monetary easing could begin in November and interest rates could rise toward the end of 2022, ahead of schedule.

While gold is often sought as a hedge against inflation, higher bond yields make it less attractive by increasing the opportunity cot for holding it instead of bonds as a safe-haven asset.

Further weighing on gold, the dollar advanced to the highest level in more than 10 months on speculation that a rate hike will come next year. Rising benchmark interest rates make the dollar more attractive to currency investors seeking yield, pressuring gold in turn by making it more expensive overseas.

The other precious metals were also lower, with silver dropping 1% while platinum shed 1.6% and palladium lost 4.8%.

At the Comex close: December gold slid $14.50 to $1,737.50; December silver dropped 23 cents to $22.47; January platinum shed $15.90 to $961.90; and December palladium tumbled $93.50 to $1,854.20 an ounce.