AGE Daily Gold Update

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

8/4/2022: Gold surges on lower yields, dollar

Source: Bill Musgrave, American Gold Exchange

Austin — Gold surged 1.7% to close near $1,807 as a retreat in yields and the dollar lifted alternative assets while tensions with China undergirded safe-haven demand. It was the metal’s highest finish in a month.

Responding to House Speaker Nancy Pelosi’s visit to Taiwan, China fired several missiles near the self-ruled island during its biggest ever military drills in the Taiwan Strait. The blatant militarism heightened tensions and sparked concerns about further conflict.

Rising inflation and higher US interest rates are beginning to show in the labor market. First-time jobless claims rose to a nine-month high last week, responding to an uptick in layoffs within the tech sector. Technology companies are heavily impacted by rising rates because their valuations are based on future earnings, which are eroded by inflation and rising borrowing costs.

Tomorrow’s release of the government nonfarm payrolls report is forecast to be weaker, with around 260,000 jobs added in July, the fewest in 19 months.

Benchmark 10-year Treasury yields slid under 2.7% as investors sought safety on the increased US jobless and fears of an economic slowdown. Falling yield s support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar fell 0.7% against major rivals, notably the UK pound, after Bank of England lifted interest rates by 50 basis points, the most since 1995. The central bank also warned that inflationary pressures are likely to result in a recession later this year. A weaker dollar lifts gold and other commodities by making them cheaper in other currencies.

The other precious metals were also higher. Silver rose 1.7%; platinum added 1.6%, and palladium picked up 3.9%.

At the Comex close: December gold surged $30.50 to $1,806.90; September silver jumped 32 cents to $20.12; October platinum rose $36.40 to $924.90; and September palladium climbed $69.60 to $2,077.50 per ounce.