AGE Daily Gold Update

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

6/18/2021: Gold marks 6% weekly drop on Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Extending its Fed-fueled slide to a third session, gold dipped another 0.3% to close at $1,769 as the dollar climbed on the prospect of tighter monetary policy. The metal ended the week down almost 6% for its biggest weekly decline in almost 14 months.

St. Louis Federal Reserve President James Bullard said today that inflation is accelerating more quickly than expected and the "natural" way to fight it is with higher interest rates. One of the Fed's most hawkish members, Bullard suggested a rate hike could come as soon as next year.

Following on the heels of Wednesday's already-hawkish policy statement from the Fed, which showed most members moving up the timeline from 2024 to 2023 for the initial rate increase, Bullard's statement caused sharp losses in all three major US stock indexes, with the Dow losing 1.3% while the S&P 500 and Nasdaq dropped 1% and 0.7%, respectively.

The dollar rallied another 0.4% to gain 2% this week, its best in nine months, as many traders were forced to cover short positions and others speculated that rising rates will drive the dollar higher. Rising rates support the buck by attracting Forex investors seeking higher yield, pressuring gold in turn by making it more expensive overseas.

But not all analysts have turned bullish on the dollar. Goldman Sachs is still predicting broad dollar weakness this year as other central banks Britain, Norway, and Canada move to tighten earlier.

Despite short-term selling, Goldman expects gold to recover on demand for inflation hedges, and Commerzbank is keeping its forecast of $2,000 an ounce gold by year end.

The other precious metals were mixed for the day and lower for the week. Silver rose 0.4% but fell 7.7% this week. Platinum dropped 1.4% for a weekly loss of 9.6%. Palladium fell 1.7% for the day and 11% for the week.

At the Comex close: August gold slid $5.80 to $1,769; July silver added 11 cents, to $25.97; July platinum shed $14.20 to $1,041; and September palladium dropped $42.20 to $2,469.90 an ounce.