AGE Daily Gold Update

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

6/14/2021: Gold slides, yields rise ahead of Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 0.7% to close under $1,866 as the Nasdaq rallied to an all-time high and Treasury yields ticked up ahead of this week's Fed meeting, undermining demand for alternative assets.

Benchmark 10-year Treasury yields crept back above 1.5% today on speculation that the Fed may send hawkish signals because of sharply higher inflation readings over the past two months. Rising Treasury yield are a headwind for gold because they increase the opportunity cost for holding it instead of bonds as a safe-haven asset.

Although the Fed has officially dismissed sharply higher inflation merely a "transitory" effect of pandemic re-openings, its statements will be scoured this week for any signs of unease about rising prices or the current levels of monetary stimulus.

While concerns about monetary tightening may be returning to the bond market, tech traders seem unfazed. Led by Apple, Tesla, and Amazon, technology stocks pushed the Nasdaq 0.8% higher to a new record. The S&P 500 added 0.2% while the Dow fell around 0.3%.

Sensitive to interest rates because their growth is heavily leveraged, tech shares had tumbled earlier this year as traders speculated that rising inflation would push the Federal Reserve to raise rates ahead of schedule. Bond yields rose at the same time, and gold prices fell.

Those trades reversed themselves over the past two months, with the Nasdaq tumbling while yields retreated and gold rallied to the highest levels since early January. If the Fed talks of tapering its bond purchases or accelerating the timeline for raising interest rates at this week's meeting, however, these trends cold reverse again.

The dollar edged slightly higher, pressuring gold and other commodities priced in it for global trade by making them more expensive in other currencies.

The other precious metals were mostly lower, with silver and palladium dropping 0.4% and 0.9%, respectively, while platinum rose 1.2%.

At the Comex close: August gold slid $13.70 to $1,865.90; July silver dropped 11 cents to $28.04; July platinum rose $14.20 to $1,165.30; and September palladium lost $24.20 to $2,756.60 an ounce.