Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinNew York spot gold tumbled 3.5% to close at $3,220 after a temporary US-China trade deal stoked equities and the dollar, boosting Treasury yields and undercutting alternative assets. Silver slid 1.3% to finish at $32.39 an ounce.

Over the weekend, the US and China reached a 90-day agreement to lower tariffs, thereby easing tensions surrounding a trade war that would have damaged both economies. The US will drop extra duties on Chinese products to 30% from 145%, while China will reduce tariffs on US imports to 10% from 125%.

Wall Street cheered the news, with the Dow and S&P 500 rallying 2.7% and 3%, respectively, while the Nasdaq surged more than 4%.

Benchmark 10-year Treasury yields rose to nearly 4.5% as investors dumped bonds in favor of risk assets. Rising yields pressure gold by increasing the opportunity cost for holding it instead of bonds for safety.

Tracking with yields, the dollar jumped 1.4% against major rivals on relief from trade war tensions. A rising dollar weighs on gold by making it and other commodities more costly in other currencies.

Traders now look toward this week's release of the current CPI for clues about inflation and therefore the Fed's likely direction on interest rates.

Platinum and palladium shed 2.2% and 3.6%, respectively.

At the New York spot close: gold fell $115.40 to $3,220; silver lost 41 cents to $32.39; platinum dropped $21.80 to $981; and palladium retreated $35.40 to $948.30 an ounce.