Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold surged 1.4% to close above $2,331 as more evidence of cooling inflation boosted rate cut hopes, pressuring Treasury yields and lifting alternative assets. The metal rose 1.4% for the week for its first weekly advance in a month. Silver picked up 1.4% today to finish at $29.40 but ended the week down 5.9%.

In another sign of fading inflation, the cost of imported goods fell 0.4% in May, the biggest drop since last December, led by easing gasoline prices. The 12-month inflation rate for imports dipped to 1.1%. The cost of exported goods declined 0.6% for May.

Following this weeks reports showing flat consumer prices and falling wholesale prices in May, the data on imports reinforced the emerging narrative that the mini surge in inflation of the first four months of the year is turning around.

At its June policy meeting, the Fed revised its quarterly forecast down to a single rate cut this year, based largely on elevated inflation during Q1. But Fed Chair Powell stipulated that further evidence of cooling inflation, like weve seen this week, would likely change the outlook.

Fed fund futures traders now see a 66% chance of a September rate cut of 25 basis points, with a second reduction before the end of the year.

Benchmark 10-year Treasury yields fell for a fourth straight session, dropping to just above 4.2%, the lowest level since March. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds for safety.

Adding to demand for safe-haven assets, consumer sentiment tumbled in June to its lowest level in seven months, according to the University of Michigan survey.

Political turmoil in France is adding to flight to safety after President Macron called for a snap election following the unexpected victories by hard-right politicians in recent Assembly election.

Platinum picked up 0.4% today but fell 1.4% this week. Palladium added 2.4% but declined 2.2% for the week.

At the New York spot close: gold gained $31.20 to $2,331.40; silver rose 41 cents to $29.40; platinum picked up $4 to $958.60; and palladium rose $20.80 to $898.20 an ounce.