Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.4% but held above $1,815 as the dollar and Treasury yields crept higher while investors weighed weak US housing data against the possible consequences of China's relaxation of Covid rules.

US pending home sales tumbled 4% in November for its sixth consecutive monthly decline, according to the National Association of Realtors. The unexpectedly sharp drop pushed the NAR index to its lowest level since the depth of pandemic closures in April 2020.

The crucial US housing market, which has been a drive-wheel of growth for the past few years, has fallen into a deep freeze because of rapidly rising mortgage rates and growing worries about the possibility of recession in 2023.

Adding to uncertainty, Covid infections are skyrocketing in China as rolls back many of the extreme zero-Covid measures that have paralyzed the nation for the past three years. While the changes offer the promise of reinvigorating global growth, they also run the risk of reviving the pandemic and stoking inflation in the world's second-largest economy.

Oil fell sharply on worries about demand in China because of rising Covid cases. US benchmark WTI crude fell 0.7% to under $79 per barrel. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Benchmark 10-year Treasury yields rose to almost 3.8%, the highest level since mid-November, as traders speculate that the Fed will continue to raise interest rates despite cooling inflation and the slowing economy. Markets are pricing in a 66% probability of a hike of 25 basis points at the February Fed meeting.

Higher yields create a headwind for gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar tracked higher with yields, adding 0.2% against major rivals. A rising dollar weighs on gold by making it pricier in other currencies.

The other precious metals were also lower. Silver lost 1.6% while platinum fell 1.3% and palladium dropped 2.3%.

At the Comex close: February gold slipped $7.30 to $1,815.80; March silver dropped 38 cents to $23.84; April platinum slid $12.50 to $1,020.20; and March palladium shed $41.30 to $1,785 an ounce.