Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.7% to close at a 10-month high near $1,345 as headway in US-China trade talks and dovish signals from Fed pressured the dollar, spurring demand for alternative assets. It was the metal's biggest one-day jump in 10 weeks.

With negotiations resuming today in Washington, President Trump tweeted that "Big progress being made on soooo [sic] many different fronts," raising optimism that the damaging tariff war may soon end. A trade deal would be bullish for gold because China is the world's largest buyer of it and most other commodities, and developments supporting its economic growth are expected to reignite demand.

The dollar fell 0.3% against major rivals as traders shifted out of safe-haven currencies. The buck has been boosted in recent months by ongoing conflicts between the US and many of its trading partners, something that should change with a US-China trade deal. A weaker dollar supports gold and other commodities by making them less expensive in other currencies.

In another bullish development for gold, Cleveland Fed President Loretta Mester became the latest central banker today to suggest that Fed may stop shrinking its balance sheet, joining Fed Governor Lael Brainerd and Chair Jerome Powell in signaling that so-called quantitative tightening may soon be over.

During its quantitative easing programs following the financial crisis, the Fed swelled its balance sheet to $4.5 trillion by buying its own Treasury notes, thereby flooding much-needed liquidity into the markets. Gold rose to its all-time high near $1,900 in 2011 behind quantitative easing.

Higher interest rates and quantitative tightening have supported the dollar over the past two years by soaking up excess liquidity, in turn pressuring gold and other commodities priced in dollars for global trade. The end of those tightening programs would reverse that trend, weakening the buck and thereby strengthening gold.

Gold also received safe-haven bids from the political uncertainty surrounding the White House's declaration of a national emergency to fund a wall on the Mexico border. Sixteen states have filed lawsuits against the move as unconstitutional.

The other precious metals were also strongly higher, with silver rising 1.4% while platinum and palladium jumped 1.8% and 3.3%, respectively.

At the Comex close: April gold surged $22.70 to $1,344.80; March silver jumped 22 cents $15.97; April platinum added $14.10, to $821; and March palladium climbed $46.70 to $1,453.90 an ounce.