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


2/12/2020: Gold recovers on QE comments

Source: Bill Musgrave, American Gold Exchange

Austin — Gold added 0.1% to close above $1,571 after Fed Chair Jerome Powell told Congress that quantitative easing will be the central bank's main line of defense in the next economic downturn. The comments helped gold recover from early-session losses triggered by a sharp rise in risk appetite as cornonavirus fears recede.

Speaking to the Senate Banking Committee, Powell said the Fed would use bond purchases, also known as quantitative easing, to stimulate the economy if the 11-year expansion begins to contract. QE was used to extensively after global financial crisis in 2009, effectively flooding the economy with cheap cash to fight deflation and promote spending.

The Fed Chair also said the economy is in a good place now, but some slowing is expected from the coronavirus outbreak. He called out the exploding national debt, which is now more than $23 trillion, as a reason for concern about the economy's future health. The CBO projects deficits of $1 trillion every year for the next decade, putting the debt above $31 trillion by 2030.

Gold rebounded from an intra-session low above $1,564 after Powell's comments. QE is bullish for the metal because it devalues the dollar and promotes inflation. Widely used as a hedge against inflation and currency risk, gold rallied to its all-time high above $1,900 after quantitative easing in 2011.

Capping gold's gains, Wall Street rallied again on expectations that the coronavirus epidemic is running its course. China reported the lowest number of new cases in two weeks and the recovery rate is rising, according to data compiled by Johns Hopkins. All three major US indexes reach new records, with the Dow rising 0.8% while the S&P 500 and Nasdaq picked up 0.6% and 0.7%, respectively.

The other precious metals were mixed, with silver and palladium sliding 0.6% each while palladium added 2.5%.

At the Comex close: April gold rose $1.50 to $1,571.60; March silver dropped a dime to $17.50; April platinum lost $6.20 to $967.30; and March palladium jumped $56.80 to $2,322.50 an ounce.

  

Metal Ask      Change
Gold $2,218.30           Price Change Up Arrow $17.51
Silver $24.80           Price Change Down Arrow $-0.02
Platinum $909.38           Price Change Down Arrow $-0.98
Palladium $1,041.52           Price Change Up Arrow $12.93
In US Dollars