AGE Daily Gold Update

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

5/2/2019: Gold slides further on Fed view

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 1% to close just above $1,271 after yesterday's comments by the Fed Chair Jerome Powell dimmed the prospect of a rate cut later this year, boosting the dollar and dulling demand for alternative stores of value. Roughly half of the metal's loss came yesterday in electronic trading after the Comex close.

At his press conference following the FOMC meeting on monetary policy, Powell was upbeat about the prospects of the US economy, saying it's in "a good place" while dismissing recent deflationary pressure as merely "transitory."

Powell's optimistic assessment took financial markets somewhat by surprise. After the Fed's dovish turn in recent months because of easing inflation and slower growth at home and abroad, traders were expecting signals that the central bank would move toward cutting interest rates later in the year. None was forthcoming, which caused speculators to change some of their earlier bets.

Equities fell immediately after the Fed's statement and continued sliding today, with the Dow and Global Dow losing 0.6%. Lower rates would boost stocks by cutting corporate borrowing costs and stimulating investment.

The dollar benefited, however, reversing early-session losses yesterday and pushing further into gains today, with the ICE Dollar index adding 0.2%. Rates cuts would pressure the dollar by cutting into the yields that attract foreign exchange investors. A stronger dollar pressures gold and other commodities by making them more expensive in other currencies.

The other precious metals were mostly lower, with silver and platinum losing 0.6% and 2.4%, respectively, while palladium edged up 0.3%.

At the Comex close: June gold dropped $13 to $1,271.30; July silver slid 9 cents to $14.64; July platinum fell $21.10 to $856.30; and June palladium rose $4.60 to $1,349 an ounce.