Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.1% to close near $1,912 as higher inflation triggered a selloff in stocks and pressured the dollar, fueling demand for alternative stores of value. The metal finished April with a loss of 2.1%, its biggest monthly decline in seven months, behind a supercharged rise in the buck.

The Fed's preferred inflation gauge, the Personal Consumption Expenditures index, jumped 0.9% in March, pushing the 12-month rate up to 6.6% from 6.4% in February. Most of the increase came from skyrocketing gas prices. The so-called core rate, excluding volatile food and energy costs, rose just 0.3% for the second consecutive month.

Separately, US employment costs leapt 1.4% in the first quarter, the most in 21 years, suggesting even greater inflation is in the pipeline as companies transfer their costs into higher consumer prices.

Wall Street tumbled after the inflation data, with the Dow dropping 2.2% while the S&P 500 lost 3% and Nasdaq 3.5%. The prospect of higher inflation, aggressive monetary tightening from the Fed to combat it, and the geopolitical uncertainties caused by Russia's widening war on Ukraine, all combined to dampen risk appetite.

Benchmark 10-year Treasury yields climbed back above 2.9% as traders jettisoned lower-yielding bonds to compensate for higher inflation expectations. Higher yields typically create headwinds for gold by increasing the opportunity cost for holding it instead of bonds.

Adding to gold's gains, dollar slipped 0.7% from a 20-year high as Forex took profits from its six straight days of gains. A falling dollar supports gold and other commodities by making them less expensive in other currencies.

Despite the day's decline, the dollar posted a monthly gain of 5.1%, its biggest since 2015, on worries about slowing global growth and expectations of sharply higher US interest rates. Higher rates lift the buck by attracting Forex investment seeking higher yield.

The other precious metals were mostly higher, with platinum and palladium climbing 3.1% and 4.4%, respectively, while silver slipped 0.4%.

At the Comex close: June gold gained $20.40 to $1,911.70; July silver dropped a dime to $23.09; July platinum picked up $28.50 to $939.60; and June palladium added $96.90, to $2,307 an ounce.