AGE Daily Gold Update

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

6/21/2021: Gold rebounds as dollar retreats

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rebounded 0.8% to close near $1,783 as the dollar retreated on Fed jawboning and bargain-hunters swept in after last week's 6% decline.

Several prominent members of the Federal Reserve spoke today and gave vastly different views of the landscape for inflation. Reiterating their comments from last week, St. Louis Fed President James Bullard and Dallas Fed President Rob Kaplan said they see consumer prices persisting above the Fed's 2% target into 2022. Both are considered part of the Fed's hawkish wing that wants to raise interest rates sooner than originally planned.

But some dovish members pushed back against the impulse to tighten money. New York Fed President John Williams dismissed recent inflationary spikes as "mostly due" to the "temporary effects" of reopening the economy. A close ally of Fed Chair Jerome Powell, Williams said inflation should return to the 2% target next year.

Williams' comments echoed those of Minneapolis Fed President Neel Kashkari, who said on Friday that inflation worries are overblown and healing the labor market should be the central bank's the highest priority. Kashkari supports no rate hikes at least through the end of 2023.

The Fed said on Wednesday, following its two-day meeting, that it would consider tapering quantitative easing and accelerating the timeline of rate hikes into 2023, in part because of inflation. The dollar rallied hard on the shift in guidance, punishing gold and equities.

Today the dollar retreated on the moderating Fed tone, dropping 0.4% against major rivals. A falling dollar supports gold and other commodities by making them less expensive in other currencies, boosting overseas demand.

Wall Street also rebounded sharply, with the Dow jumping 1.8% while the S&P 500 and Nasdaq added 1.4% and 0.8%, respectively. Treasury yields were little changed.

The other precious metals were also higher, with silver adding 0.2% while platinum rose 0.9% and palladium picked up 3.6%.

At the Comex close: August gold gained $13.90 to $1,782.90; July silver added 6 cents, to $26.03; July platinum rose $9.60 0.9% to $1,050.60; and September palladium climbed $88.40 to $2,558.30 an ounce, up 3.6%.