Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold tumbled 1% in a matter of minutes to close under $1,275 after several massive, midday trades triggered a technical sell-off. The metal still ended the week 0.4% higher, notching its first weekly win in a month as worries grew about the prospects for tax reform.

Gold was channeling around $1,283 in mid-session when the sale of contracts totaling four million ounces on Comex, worth around $4 billion, came out of nowhere to knock the metal down $9 per ounce in 10 minutes. The mysterious liquidation triggered automatic stop-losses until support held at $1,274.

Conditions were otherwise positive for the metal. Consumer sentiment slipped in November on concerns about rising inflation, and the dollar and equities stumbled on the growing divergence between House and Senate tax bills. The dollar retreated nearly 0.2%, totaling a weekly loss of 0.7%. The Dow and S&P 500 edged down 0.1% to end eight consecutive weekly gains for each index.

Major differences in the respective tax bills produced by the Senate and House this week have undermined confidence in the quick passage of legislation, which is taking a toll on investor sentiment. Unlike the House, the Senate wants state and local tax deductions eliminated while mortgage interest deductions and the estate tax remain. And the Senate wants to push lower rates for corporations off until 2019, while the House wants them next year.

The promise of lower taxes, especially on corporations, has been a main driver behind the S&P 500's rally of 20% since President Trump's election. It has also helped to support the dollar by boosting the prospects for growth and inflation, therefore increasing the likelihood of addition interest rate hikes from the Fed.

The other precious metals were also down for the day but higher for the week. Silver slid 0.6% but held a weekly gain of 0.2%. Platinum also dropped 0.6% today but rose 1.1% this week. After hitting a 16-year high on Wednesday, palladium dropped 1.1% on the day but remained 0.2% higher for the week.

At the Comex close: December gold tumbled $13.30 to $1,274.20; December silver lost 10 cents to $16.87; January platinum dropped $8.50 to $932.10; and December contract slid $11.30 to $993.10 an ounce.