Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slid 0.4% to close under $1,315 as the dollar climbed against major rivals on weakness in the Aussie dollar and continued US-China trade uncertainty, undermining demand for alternative stores of value.

The ICE Dollar Index rose 0.3% to the highest level in nearly two weeks as the Australian dollar plummeted after the country's central bank opened the door to rate cuts. In an abrupt shift from an ongoing policy of monetary tightening, Reserve Bank Governor Philip Lowe said rates could go lower because of slower global growth, weakening labor markets, and softer inflation.

The buck was also boosted by safe-haven inflows following President Trump's State of the Union address. While the President mentioned increasing infrastructure spending, he outlined no substantive economic policy initiatives. And while investors were hoping for news of progress in the ongoing trade war with China, no new information was forthcoming.

Along with rising interest rates, trade conflicts have been a source of support for the dollar over the past year as global forex traders have sought safety, pressuring gold and other commodities priced in dollars for global trade. The Fed's newly dovish attitude and improving prospects for trade détente with China will likely undermine that dollar-support and boost gold this year.

Former Fed Chair Janet Yellen said today that the Fed's next move could be a rate cut, depending on whether weakening global growth spills over into the US economy. Current Fed Chair Jerome Powell signaled last week that the next move could go either way.

The US trade deficit fell more than 11% in November to a five-month low, according to government report delayed by the recent shutdown. Falling oil prices and tariff-related declines in industrial imports drove most of the reduction. The 2018 trade gap remains on track to be the largest in 10 years.

The other precious metals were mostly lower, with silver and platinum dropping 0.9% and 0.7%, respectively, while palladium added 0.8%.

At the Comex close: April gold slid $4.80 to $1,314.40; March silver lost 14 cents to $15.70; April platinum dropped $6.10 to $813.80; and March palladium gained $10.40 to $1,351.60 an ounce, a new record high.