Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.1% to close above $1,848 despite a rising dollar as Americans fret about the US economy and Treasury yields fell on flights to safety. It was the metal's highest finish in more than six months.

Investors are bracing for a downbeat new year. According to the latest Gallop poll, 79% of Americans think 2023 will be a year of great economic difficulty. In addition, 90% say the coming year will rife with political conflict because of divided government after the Republicans narrowly won of the House. And 85% believe global affairs are entering a "troubled year."

The negative sentiment is not restricted to the US. Kristalina Georgieva, head of the IMF, said 2023 will be "tougher" than last year, with one-third of the world potentially falling into recession.

News from PMI China substantiated the dour viewpoint as the official manufacturing PMI fell at the fastest pace in three years in December. First, repressive Covid measures hampered output in the world's second-largest economy, only to be followed by an explosion of infections with the easing of zero-Covid policies in the past month.

Benchmark 10-year Treasury yields dropped under 3.75% as investors flocked into the perceived safety of government debt. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Gold's gains came despite of solid rise in the dollar, which gained 1.1% after falling German inflation weakened the euro by lowering the pressure on the ECB to raise interest rates. A stronger dollar typically weighs on gold and other commodities by making them more expensive in other currencies.

Gold also overcame sharply lower oil prices. US benchmark WTI plunged 3.4% to $77.51 on worries that China's rising Covid caseload and slowing economy will reduce global energy consumption in 2023. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mostly higher, with silver and platinum adding 0.8% and 1%, respectively, while palladium lost 5.9%.

At the Comex close: February gold gained $19.90 to $1,846.10; March silver added 20 cents, to $24.24; April platinum picked up $10.40 to $1,093.30; and March palladium shed $105.10 to $1,692.90 an ounce.