AGE Daily Gold Update

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

5/2/2024: Gold inches lower on risk rally

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold inched down less than 0.1% to close under $2,310 despite decreases in yields and the dollar after yesterday's dovish comments from Jerome Powell stoked risk appetite, undercutting safe-haven assets. Silver picked up 0.3% to finish at $26.58 an ounce.

At the end of the Fed's two-day meeting on Wednesday, Fed Chair Powell relieved investor anxiety by saying the central bank's next move will not be to raise interest rates. A recent spate of higher inflation readings had caused some concern, but Powell remains confident that upcoming data will reinforce his view that rate cuts, not hikes, are on the way.

Wall Street rejoiced in Powell's dovish lean, with all three major US indexes rallying more than 1% as investors shifted into risk assets.

Benchmark 10-year Treasury yields nonetheless slipped back under 4.6%, stemming gold's slide by decreasing the opportunity cost for holding it instead of bonds.

The dollar fell 0.4% on the changing rate view and indications that the Bank of Japan will intervene again to support the yen.

Tomorrow's release of the government's nonfarm payrolls report should be further clues on the near-term direction of the labor market and therefore interest rates.

Platinum added 0.8% while palladium fell 1%.

At the New York spot close: gold dipped $1.40 to $2,309.60; silver added 9 cents, to $26.58; platinum picked up $7.70 to $962.60; and palladium shed $9.50 to $939.10 an ounce.

5/1/2024: Fed holds rates, gold gains

Source: Dana Samuelson, American Gold Exchange

Austin — Both gold and silver rebounded from yesterday’s sharp declines in today’s New York session. Gold gained 0.35% to finish the New York session at $2,311.00, while silver gained a modest 10 cents up to $26.48. Both metals enjoyed further gains in the electronic session with gold ending the US session up another $8.55 to $2319.55 and silver up another 20 cents to $26.68.

As expected, the Fed left rates unchanged at the conclusion of today’s meeting. Citing recent persistent inflation, the Fed indicated they would continue to take a wait and see approach towards when it might be appropriate to alter the current fed funds rate. With a full quarter of firmer inflation now in the rearview mirror, Chairman Powell said confidence that inflation was headed towards their 2% target was lower than it was at the conclusion of their March meeting.

“We’ve stated that we do not expect that it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2%. It is likely that gaining such greater confidence will take longer than previously expected,” Powell said.

Additionally, the Fed announced that beginning in June they would slow the reduction of their balance sheet known as QT. Specifically, their monthly bond run-off would decline from $60 billion to $25 billion per month. From here forward the Fed is taking a more cautious approach towards further balance sheet reduction to head off potential market volatility.

During a similar bond reduction phase in September 2019, tightening liquidity conditions caused a dramatic spike in bank-to-bank overnight borrowing rates, disrupting overnight lending markets. The Fed was forced to intervene by injecting billions of dollars of liquidity into the system.

At the New York spot close: gold gained $8.10 to $2,311.00; silver rose 11 cents to $26.48; platinum gained $7.05 to $954.90; and palladium shed $4.20 to $948.60 an ounce.

4/30/2024: Gold notches 3.9% rise in April

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold fell 1.9% to finish at $2,302.90 as traders closed their monthly books by taking profits from a record rally while preparing for potentially hawkish messaging from the Fed. The gold price still rose 3.9% in April, notching its third consecutive monthly gain. Silver dropped 3.6% today but posted a 6.4% gain for the month.

The Fed began its two-day meeting on monetary policy today with the expectation that interest rates will stay 5.25 to 5.5%. Traders will scour the post-meeting statement and press conference from Fed Chair Jerome Powell for clues on the direction of interest rates.

At the beginning of the year, Powell said inflation was contained and a pivot to lower interest rates was coming. The market, perhaps getting ahead of itself, priced in four to six reductions of 25 basis points in 2024.

But resurgent consumer and wholesale prices have changed the outlook. For the past two months, some Fed officials have been preaching higher rates for longer. Powell is widely expected to make this hawkish stance the new Fed gospel at this week's meeting.

Fed fund futures traders now see a likelihood of 64% that the initial rate cut will come in November, with only a 24% chance of a second one before 2025.

Data released today underscore the Fed's dilemma. US labor costs rose 1.2% in the first quarter, the fastest in 18 months, adding to inflationary pressure in the pipeline.

The Chicago PMI tumbled under 38 in April, the lowest level since November 2022, where readings under 50 indicate contraction. It was the fifth consecutive negative reading for the regional manufacturing index.

And consumer confidence plunged to a 21-month low in April, the Conference Board reported, because of elevated food and gas prices, and worries about geopolitical turmoil.

Benchmark 10-year Treasury yield climbed back to nearly 4.7% after the robust labor-cost data, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking higher with yields, the dollar rebounded 0.6% against major rivals, adding to headwinds for gold and other commodities by making them pricier in other currencies.

Despite the shifting interest rate landscape, gold rallied to a series of new all-time highs in April. It remains strongly supported by the same forces, including unprecedented buying by global central banks as they diversify their reserves away from G7 currencies; safe-haven inflows because of geopolitical turmoil; and aggressive physical buying in Asia, especially China, among retail investors.

Platinum slipped 0.7% today but rose 4.4% this month. Palladium fell 2.5% for a monthly decline of 6.7%.

At the New York spot close: gold dropped $44.30 to $2,302.90; silver slid 98 cents to $26.37; platinum slipped $6.25 to $947.85; and palladium shed $24.80 to $952.80 an ounce.

4/29/2024: Gold rises ahead of Fed

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold gained 0.2% to close above $2,347 as yields and the dollar declined ahead of tomorrow's launch of the Fed's two-day meeting on monetary policy, boosting alternative stores of value. It was the metal's third straight winning session. Silver rose 0.4% to $27.37 an ounce.

The Fed is almost universally expected to leave interest rates unchanged at this week's meeting. But speculation is growing that the central bank will be slower to pivot toward rate cuts in coming months than the markets—and the Fed itself—expected.

Six months ago, Jerome Powell began laying the groundwork for rate reductions, saying the Fed was increasingly confident that inflation was under control and interest rates had reached peaked at 5.25% to 5.5%. Fed funds futures markets began pricing in four to six rate cuts for 2024.

Over the past two months, however, inflation readings and US economic data have been overall stronger than the Fed anticipated, causing Powell to drop the dovish outlook. The question now is whether he will become positively hawkish at the meeting this week.

Fed fund futures traders are pricing in just one rate cut in 2024, with the odds almost evenly split between September and December.

Still, benchmark 10-year Treasury yields pulled back from five-month highs, settling near 4.6% as investors hedged their positions in case the Fed's messaging is more neutral than hawkish. Lower yields support gold by reducing the opportunity cost for holding it instead of bonds for safety.

Also helping gold, the dollar fell 0.3% against major rivals led by the yen when the Bank of Japan intervened to boost the currency, lifting it from a 10-year low against the dollar. A falling dollar lifts gold and the commodities by making them cheaper overseas.

Platinum and palladium rose 4.3% and 2%, respectively.

At the New York spot close: gold gained $4.08 $2,347.20; silver added 12 cents, to $27.37; platinum picked up $39.40 to $954.10; and palladium climbed $19.30 to $977.60 an ounce.

4/26/2024: Gold gains on moderate PCE

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold gained 0.2% to close near $2,335 as Treasury yields retreated after the PCE inflation gauge was in line with expectations and consumer sentiment softened. The metal still fell 2.7% for the week as worries about an escalation in the Israel-Iran conflict subsided. Silver slid 0.4% to $27.25 an ounce, posting a weekly loss of 5.5%.

The Personal Consumption Expenditures index rose 0.3% in March behind sharply higher housing and utilities costs, pushing the annual rate up to 2.7% from 2.6% in February. The core PCE, less food and energy, also rose 0.3% for an annual 2.8% rate, unchanged from the month before.

While inflation is proving to be stickier than the Fed hoped, the March PCE nonetheless came in softer than many feared, lending some relief to inflation-worried markets. Benchmark 10-year Treasury yields retreated under 4.7%, helping to lift gold by decreasing the opportunity cost for holding it instead of bonds.

Meanwhile, the University of Michigan said consumer sentiment weakened in April because of rising geopolitical tensions, weak equities, and high interest rates.

Capping gold's gains, the dollar rose 0.5% against major rivals, hitting a 34-year high against the yen when the BOJ held interest rates unchanged at its two-day meeting.

After closing at a record high near $2,400 last Friday, gold retreated this week on easing tensions between Israel and Iran. The two longtime belligerents, having exchanged largely symbolic drone attacks, are apparently letting the matter rest.

Platinum added 0.1% today but subtracted 2.2% this week. Palladium fell 2.4% for a weekly decline of 6.6%.

At the New York spot close: gold gained $5 to $2,334.80; silver shed a dime to $27.25; platinum picked up $1.10 to $914.70; and palladium shed $23.70 to $958.30 an ounce.

4/25/2024: Gold rises on soft GDP, dollar

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold gained 0.2% to close near $2,330 despite rising Treasury yields as the dollar fell on weak US GDP data and traders braced for a hotter-than-expected PCE index for March. Silver was virtually unchanged at $27.35 an ounce.

The economy slowed in the first quarter, with GDP rising just 1.6%, the slowest pace in nearly two years. The primary headwinds were rising imports, falling government spending, and a build-up of inventories. Stripping out these factors, growth was a far more respectable 3.1%.

More surprising to the markets, core inflation surged 3.7% in Q1 after rising 2% in Q4, as measured by the Fed's preferred measure, the core PCE. It also increases the likelihood that tomorrow's release of the PCE index for March will be significantly higher than most forecasts.

While the slower GDP probably understates the actual strength of the economy, the high core PCE could change the Fed's outlook on inflation and its calculus for rate cuts going forward.

In addition, first-time jobless claims fell by 5,000 to 207,000 last week, the lowest level since mid-February, signaling that the labor market remains more robust than the Fed would like.

Benchmark 10-year Treasury yields jumped above 4.7% on the data as traders speculated that the Fed may be less inclined to begin cutting rates soon. Higher yields are a headwind for gold because they increase the opportunity cost for holding it instead of bonds for safety.

Fed fund futures trading now puts the odds of a quarter-point cut in September at less than 57%, down from 70% yesterday.

The dollar fell 0.3% against major rivals as currency traders responded to the weaker GDP numbers rather than inflation. A softer dollar typically supports gold and other commodities by making them cheaper overseas.

Platinum added 0.5% while palladium lost 2.6%.

At the New York spot close: gold gained $5.30 to $2,329.80; silver was flat at $27.35; platinum picked up $.90 to $913.60; and p0alladium shed $26.30 to $982 an ounce.

4/24/2024: Gold dips ahead of GDP, PCE

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold edged down 0.1% to close at $2,324.50 as yields and the dollar crept higher ahead of key data releases later this week. Silver was nearly flat at $27.35 an ounce.

With much of the risk premium from the Israel-Iran conflict largely drained from the market, investors are awaiting tomorrow's release of GDP figures for the first quarter and Friday's personal consumption index for additional direction on interest rates.

Most forecasts expect GDP to have risen by around 2.2% in Q1, driven by continued strength in consumer spending at around 3%. It would be the seventh consecutive quarter of growth above 2%, the longest streak in 20 years.

The PCE index, the Fed's preferred inflation gauge, is projected to increase 0.3% in March, which is slightly less than the CPI of 0.4% for that month. But the annual inflation rate is expected to climb to 2.6% from 2.4% the month before.

Fed fund futures traders put the odds of an initial quarter-point rate cut in September at 71%. But if data comes in stronger than forecasts, the Fed could well decide to postpone rate cuts. Weaker GDP and cooler inflation, on the other hand, could increase the likelihood that lower rates will arrive sooner.

Benchmark 10-year Treasury yields jumped above 4.65%, hovering near the highest levels this year, on expectations that the data will encourage the Fed to delay cuts. Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking higher with yield the dollar added 0.2% against major rivals, pressuring gold and other commodities by making them pricier in other currencies.

Irrespective of interest rates, gold remains strongly supported by near-record buying by global central banks, the uncertain US political landscape during an important election year, and ongoing geopolitical conflict.

Platinum and palladium slid 0.7% and 1.8%, respectively.

At the New York spot close: gold dipped $3,.20 to $2,324.50; silver slipped 2 cents to $27.35; platinum slid $6.40 to $908.70; and palladium shed $18.50 to $1,008.30 an ounce.

4/23/2024: Gold dips on receding Iran fears

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold dipped 0.2% to close under $2,328 despite weakness in yields and the dollar as the easing of tensions between Iran and Israel lowered safe-haven bids for a second day. Silver picked up 0.4% to $27.36 an ounce.

Following Israel's largely symbolic drone attack on areas near Isfahan late last week, Iran has signaled that it will not respond with tit-for-tat retaliation that could vastly expand warfare in the Middle East.

Worries about a wider war helped to drive gold to new record highs as global investors sought safety. Much if not all of this fear premium has left the gold price after a two-day correction of 3%.

The metal's slide was backstopped after US data showed the economy lost momentum in April. The S&P flash services PMI fell to a five-month low of 50.9, barely above contraction, while the manufacturing PMI slipped into contraction at 49.9. Companies reported declining orders and cuts in hiring.

Benchmark 10-year Treasury yields dropped back under 4.6% as traders speculated that the weaker data could entice the Fed toward rate cuts. Tracking lower with yields, the dollar dropped 0.4% against major rivals, supporting gold and other commodities by making them less expensive in other currencies.

Gold continues to be support by near-record buying by global central banks, especially China and Russia, as they hedge against G7 currency risk.

Platinum slipped 0.9% while palladium added 1.1%.

At the New York spot close: gold dipped $4.50 to $2,327.70; silver rose 12 cents to $27.36; platinum dropped $8.50 to $915.10; and palladium picked up $11.20 to $1,026.80 an ounce.

4/22/2024: Gold drops as tensions cool

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold fell 2.8% to close at a one-week low under $2,333 as Iran and Israel stepped back from the brink of a wider Middle East war, lifting risk appetite and stifling demand for safe havens. Silver shed 5.5% to $27.25 an ounce.

Following Israel's drone attack near Isfahan late last week, Iran downplayed the incident, saying the link to Israel has not been proven. The action came after Iran ineffectually fired hundreds of drones and missiles into Israel in retaliation for the recent killing of Iranian generals in Syria.

Rather than escalate the turmoil over Gaza into a direct military engagement, both Iran and Israel lowered the heat by these largely symbolic displays of force with no further actions threatened for now.

Investors cheered the reduction of tensions with a return to risk assets. The Dow and S&P 500 gained 0.8% and 1%, respectively, while the Nasdaq added 1.2%.

Benchmark 10-year Treasury yields crept higher as traders shifted out of sovereign debt. Higher yields tend to weigh on gold by increasing the opportunity cost for holding it instead of bonds. The dollar was essentially flat.

Worries about a possible expansion of the war in the Middle East helped elevate the gold price to all-time highs despite hotter-than-expected US economic data and increasingly hawkish signals from the Fed about interest rates. The cooling of the conflict served as an opportunity to take profits from this record run.

Investors now turn to Friday's release of the PCE index, the Fed's preferred inflation gauge. If the reading comes in softer than expected, the gold price could resume its climb. If inflation is stronger than expected some erosion in gold may occur, although demand for inflation hedges could offset it.

Platinum fell 1.3%, palladium 1%.

At the New York spot close: gold lost $66.20 to $2,332.20; silver shed $1.60 to $27.25; platinum dropped $11.80 to $923.60; and palladium slid $10.80 to $1,015.60 an ounce.

4/19/2024: Gold rises for 5th straight week

Source: Bill Musgrave, American Gold Exchange

Austin — Racing to a new record close, New York spot gold gained 0.7% to finish at $2,398.40 on flights to safety after Israel retaliated against Iran, ratcheting up tensions in the Middle East. The metal ended the week 1.8% higher for its fifth consecutive weekly rise. Silver jumped 1.6% to $28.84 for a weekly gain of 1.8%.

Israel made good on its vow to retaliate against Iran for its drone and missile barrage last weekend, sending drones to attack an area near Isfahan. While no damage was reported, the strike was apparently intended to demonstrate Israel's ability to reach inside Iran itself.

Benchmark 10-year Treasury yields dropped sharply the immediate wake of the attack, touching as low as 4.5% on flights to safety before retracing most of the loss after Iran said it would not retaliate.

Tracking along with yields, the dollar also fell sharply before bouncing back to a small loss.

Crude prices rose 0.6% to more than $83 per barrel on concerns that escalating tensions in the region may interrupt global oil supplies. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

In its semiannual report on financial stability, the Fed said today that high US interest rates are a could destabilize the global financial system. Higher-for-longer rates could strain the balance sheets of households and businesses. Banks with high exposure to commercial real estate and consumer loans could encounter greater losses, reducing the amount of credit in the system.

Platinum fell 1.2% for a weekly loss of 5.8%. Palladium shed 1.2% for a weekly loss of 3.1%.

At the New York spot close: gold gained $16.10 to $2,398.40; silver rose 46 cents to $28.84; platinum dropped $11.10 to $935.40; and palladium slid $12.10 to $1,026.40 an ounce.