AGE Daily Gold Update

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

1/9/2019: Gold gains, extends on dovish Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.5% to close at $1,292 as the dollar slipped ahead of the release of minutes from the recent meeting of the Federal Reserve. The metal extended those gains in electronic trade, pushing above $1,294 after the minutes showed several members dissenting from the December rate hike.

While the Fed voted unanimously in December to raise rates for the fourth time last year, several members were resistant to the move, arguing that volatility in the financial markets and slowing global growth were reasons to wait and see. The members also said they saw little reason for many more hikes at all.

The dovish minutes reinforced the view that the tightening cycle is nearly at an end. Boston Fed Eric Rosengren said today that the Fed should stand pat, echoing opinions recently voiced by several other members of the FOMC.

A consistent pattern of near-quarterly hikes by the Fed over the past two years has been a main driver of strength in the buck, pressuring gold in turn by making it more expensive in other currencies. The end of rate hikes would reduce this headwind for the metal.

The dollar fell 0.6% against major rivals before the minutes and extended its losses afterward, dropping the ICE Dollar Index to a three-month low. The buck largely ignored reports that China-US trade talks have reached some tentative agreements that China will import more US agricultural items and manufactured goods.

Also supporting gold, oil rallied more than 4% close above $50 for the first time since mid-December. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were also higher, with silver adding 0.1% while platinum and palladium rose 0.4% and 0.6%, respectively.

At the Comex close: February gold gained $6.10 to $1,292; March silver added 2 cents, to $15.74; April platinum rose $3.50 to $825.30; and March palladium rose $8 to $1,269.40, its fourth straight record close.