AGE Daily Gold Update

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

6/9/2021: Gold edges up on falling yields

Source: Bill Musgrave, American Gold Exchange

Austin — Gold edged up 0.1% to close above $1,895 as Treasury yields and the dollar slipped ahead of tomorrow's CPI release, boosting demand for alternative assets.

Benchmark 10-year Treasury yields plunged to 1.471%, the lowest level since late February, as investors shifted toward bonds despite what is expected to be a heady reading on Consumer Price Index, due tomorrow.

Rising inflation typically causes traders to sell lower yielding bonds and demand higher yields to compensate for the loss in purchasing power of future cash flows resulting from a higher cost of living. But the bond market has apparently been convinced by the Fed's constant chorus that bursts of inflation will be transitory and not effect the course of monetary policy.

Falling yields support gold by the reducing the opportunity cost for holding the metal instead of bonds as a safe-haven asset. At the same time, rising consumer prices are typically bullish for the metal, which is often sought as a hedge against inflation risk.

Meanwhile, China's factory-gate inflation soared to the highest level in 13 years, driven by sharply higher commodity and raw materials pricing, and by Covid-related supply-chain shortages.

The dollar slipped slightly because of falling yields as Forex traders await inflation data to gauge monetary policy. A weaker dollar typically lifts gold and other commodities by making them more expensive overseas.

The other precious metals were mixed, with silver rising 1% while platinum and palladium lost 0.9% and 1.2%, respectively.

At the Comex close: August gold gained $1.10 to $1,895.50; July silver climbed 27 cents to $28; July platinum dropped $10.70 to $1,151.80; September palladium lost $34.20 to $2,772.80 an ounce.