Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.6% to close at $1,782 as Treasury yields and the dollar rose after the ECB left monetary policy unchanged, undercutting demand for alternative stores of value. The metal had reached a two-month high of 1,793 the previous session on rising global pandemic worries.

After meeting to discuss policy, the European Central Bank held interest rates and offered no increases in quantitative easing. While the former was expected, the latter disappointed bond investors hoping for expanded purchases of sovereign bonds to fuel the recovery. Yields on German bunds and other government debt rose on the news.

US Treasury yields tracked higher with their European counterparts, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar added 0.2% against major rivals as Forex trader, wary of the exploding pandemic in India and elsewhere, shifted toward the perceived safety of the greenback. A rising dollar weighs on gold and other commodities by making them more expensive in other currencies.

India reported another 314,000 new cases of Covid-19 in the last 24 hours, a global pandemic record, and more than 2,000 additional deaths.

Wall Street turned negative, with all three major indexes dropping nearly 1%, after President Biden announced a plan to raise the highest income tax rate and nearly double capital gains taxes. The proposal has little chance of being passed into law.

The Silver Institute is forecasting silver to climb 33% this year to an average price of $27.30 behind stronger industrial and investor demand, according to its annual World Silver Survey. Overall demand is expected to increase by 15%, investment demand by 26%.

The other precious were also lower, with silver dropping 1.5% while platinum and palladium slid 0.5% and 1.1%, respectively.

At the Comex close: June gold slipped $11.10 to $1,782; May silver dropped 39 cents to $26.18; July platinum slid $6.20 to $1,208.50; and June palladium fell $32.70 to $2,842.90 an ounce.