Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold inched up less than 0.1% to hold above $1,761 as the markets tread water ahead of Friday's speech by Fed Chair Jerome Powell.

With both US economic data and inflation softening in recent weeks, investors are weighing opposing questions. Will the Fed scale back rate increases to prevent recession? Or will it march ahead with another jumbo hike in September to keep inflation expectations contained?

Fed fund futures are now pricing in a 63% chance that the Fed will raise interest rate by 75 basis points at its September meeting. One week ago, the odds were just 40%, and a week before that, they were 70%. What has caused all the flipping?

In early August, the CPI and PPI showed inflation falling in July. At the same time, a raft of data showed the economy weaking further after two consecutive quarters of contraction. Traders assumed the Fed would pivot away from another aggressive hike to rescue GDP.

In the past week, however, a series Fed officials began pushing back on this narrative, reasserting the hawkish position that the central bank must continue aggressive rate hikes despite slower economic growth.

When Powell speaks at the Jackson Hole summit on policy this week, all ears will be straining for definitive direction.

In the meantime, the markets are waiting. Treasury yield and the dollar were virtually unchanged today. Gold is sensitive to rate increases because they lift yields and the dollar, undercutting demand for alternative assets.

Wall Street was slightly higher, with the Dow adding 0.2% while the S&P 500 picked up 03.%.

The other precious metals were mixed. Silver and platinum lost 0.6% and 1.1%, respectively, while palladium picked up 2.7%.

At the Comex close: December gold crept up 30 cents to $1,761.50; September silver slipped 12 cents to $18.91; October platinum dropped $9.60 to $866.80; and September palladium climbed $52.70 to $2,025.60 an ounce.