AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

3/22/2024: Gold falls on sharp dollar rally

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 1.1% to close at $2,160 as a stronger dollar and weaker demand in India undercut prices despite a further erosion in Treasury yields. For the week, the gold price was little changed, inching down less than 0.1%. Silver slid 0.6% to 25.69, losing 2% for the week.

The dollar jumped 1% against major rivals to post its second straight weekly gain as currency traders position themselves for slower rate cuts from the Fed than other major central banks. A rising buck pressures gold by making it pricier in other currencies.

The Swiss National Bank surprised the markets this week with a quarter-point reduction, making it the first major central bank to cut. The ECB has publicly stated it will cut in June; the Bank of England signaled this week this week that rate cuts are coming.

Emerging markets have already begun lowering rates, and China has begun large-scale easing to pull its economy out of its Covid tailspin, to the extreme detriment of the yuan. Only the Bank of Japan is bucking the trend, raising rates slightly this week to lift itself out negative interest rates for the first time in 17 years.

Against this backdrop, the US economy is faring better than most of its peers and US inflation proving stickier than expected. The dollar gathered bids this week as traders bet that the Fed will lag in what’s being called “the great central bank reversal” from tightening to loosening.

While a rising dollar is a headwind for gold, sticky US inflation is driving buyers to its traditional roll as an inflation hedge and ongoing geopolitical turmoil is stoking global demand for safe havens.

Benchmark 10-year Treasury yields fell to just above 4.2%, its 200-day moving average on carryover from the Fed’s dovish post-meeting announcement that it still plans to cut rates three times this year. Sovereign bond yields tend to mirror each other, and the dovish regimes overseas may further weigh on US yields.

Adding to pressure from the stronger dollar, physical demand for gold in India flagged this week because of high prices from the metal’s recent rally to all-time high prices. India is the world’s second biggest gold buyer.

Platinum fell 1.6% for a weekly loss of 4.8% while palladium shed 2% for a weekly retreat of 8.4%.

At the New York spot close: gold dropped $24.70 to $2,160; silver slipped 16 cents to $24.69; platinum slid $14.60 to $898.40; and palladium shed $20.60 to $998.30 an ounce.