AGE Daily Gold Update

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

1/6/2022: Gold tumbles on hawkish Fed

Source: Bill Musgrave, American Gold Exchange

Austin — Gold lost 2% to close under $1,790 as an increasingly hawkish Federal Reserve lifted Treasury yields and the dollar, undercutting alternative stores of value. It was the metal's deepest daily drop in six weeks, with roughly half coming yesterday in electronic trade.

Yesterday’s minutes from the December Fed meeting showed the central bank has become increasingly anxious about inflation and is laying plans to tighten monetary policy more aggressively than expected. Most members now foresee as many as three rate hikes in 2022, and several have called for reducing the Fed’s balance sheet.

Benchmark 10-year Treasury yields jumped on the prospect of higher interest rates, pushing to a 10-month high above 1.72%. Rising yields pressure gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar extended yesterday’s rise, adding another 0.1% against major rivals on the hawkish Fed view. A stronger dollar pressures gold and other commodities priced in it for global trade by making them pricier in other currencies.

The other precious metals were also lower, with silver falling 4.2% while platinum and palladium lost 4.1% and 1.5%, respectively.

At the Comex close: February gold fell $35.90 to $1,789.20; March silver lost 98 cents to $22.19; April platinum dropped $41.20 to $960.70; and March palladium shed $28.70 to $1,873.90 an ounce.