Daily Gold Update

Source:Dana Samuelson, American Gold Exchange

AustinGold tumbled 1.6% to close the New York session at $1,788.00. Silver, platinum, and pallidum tumbled as well succumbing to risk off market sentiment that favored the relative safety of the US dollar and treasuries.

Yesterday’s hawkish Fed policy statement and Chairman Powell’s press conference comments reinforcing the Fed’s commitment to hold rates higher for longer to fight inflation boosted the dollar today. The dollar’s gains of about 1% on the US dollar index conversely pressured gold lower. A stronger dollar makes gold more expensive overseas where gold enjoys its strongest overall demand.

Following the Fed’s lead both the Bank of England and the ECB hiked interest rates as well today. The BOE raised rates 0.5% from 3.0% to 3.5%, their ninth consecutive rate hike. The ECB raised interest rates 0.5% as well, their fourth consecutive hike. The ECB also announced they intend to reduce their $5 trillion euro asset purchase program (APP) portfolio beginning in March of 2023 at a “measured and predictable pace.”

Fears of a US economic recession increased following the release of November’s retail sales figures which fell 0.6%, the largest monthly decline in nearly a year. The sales decline was notable for two reasons. October’s retail sales gained 1.3% and November includes some of the biggest shopping days of the year.

October’s retail sales surge against November’s decline suggests some shoppers may have started the holiday season early, while some analysts suggested inflation’s bite is increasingly being felt by US consumers with each passing month.

While employment remains strong, real average hourly earnings are down 1.9% from a year ago. Wage increases have simply not kept pace with inflation in 2022. Over the last six months consumer savings rates have fallen to cyclical lows while credit card debt has reached cyclical highs. Credit card debt jumper 15% in the last quarter, the largest jump in 20-years while credit card rates now average more than 19%. Cash strapped consumers have increasingly relied on credit card debt to retain their standard of living in the face of the highest inflation in 40-years.

Manufacturing slowed as well in November, with factory production falling 0.6% in November, the first production decline since June. Regional Fed surveys showed manufacturing weakened more than expected in both New York and Philadelphia.

Equities markets fell sharply following the news of the weaker sales and manufacturing reports, with the Dow declining nearly 950 points or 2.7%, the S&P 500 falling 112 points or 2.8% and the Nasdaq dropping 375 points or 3.4% at mid-day.

At the Comex close: February gold dropped $30.30 to $1,788.00; March silver fell 83 cents to $23.31; January platinum fell $25.50 to $1,013.20; and March palladium fell $108.50 to $1,813.60 an ounce.