Daily Gold Update

Source:Dana Samuelson, American Gold Exchange

AustinGold tumbled a little over 1% on Thursday. Better than expected quarterly profits from bellwether retailer Walmart, a fall in US jobless claims, and prospects for a US debt ceiling deal boosted positive sentiment for the US economy, buoying the US dollar and T-bill yields, which in turn pressured gold to its lowest level in two months.

The US dollar index, after holding major support at 101 for the past two months, is trending higher. Today the dollar index punched up 70 basis points to its highest level in two months, moving firmly over short-term upside resistance at 102.75 to as high as 103.57 in intraday trading. Similarly, the 10-year US T-bill yield rose a modest 7 basis points to 3.64%, also its highest level since late March, following an uptrend pattern as well.

Further supporting dollar and yields sentiment were comments by Dallas Federal Reserve Bank President Laurie Logan and Fed Governor Philip Jefferson. Both implied in interviews that a June pause in interest rate hikes by the Fed was data dependent and not a certainty due to stubbornly strong inflation. Over the last two weeks market odds of a Fed rate hike pause have fallen from 95% to 68% as both inflation and current US economic data remains resilient.

Contrarily the Conference Board’s Leading Economic Index (LEI) declined 0.6% in April to 107.5, its lowest reading since September 2020. April was the 13th consecutive monthly LEI decline, the longest streak since 2009. The forward-looking LEI is signaling a worsening economic outlook for the US. Specifically, the Conference Board forecasts a contraction of US economic activity starting in Q2 leading to a mild recession by mid-2023.

At the Comex close: June gold tumbled $25.10 to $1,959.80; July silver fell 26 cents t0 $23.64; July platinum dropped $24.40 to $1,058.20; and June palladium dropped $34.70 to $1,450.20 an ounce.