AGE Daily Gold Update

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

8/11/2022: Gold dips on profit-taking

Source: Bill Musgrave, American Gold Exchange

Austin — Gold dipped 0.4% to close above $1,807 despite upbeat data on wholesale inflation as yields rebounded and traders took profits from the recent gold rally. The metal had risen 1.3% over the previous three sessions and 5% over the past two weeks, driven mainly by worries over slowing growth and geopolitical tensions.

The US producer price index fell 0.5% in July to post its first negative month since April 2020. The decrease was led by a 1.8% reduction in the cost of goods and a 9% tumble in energy costs. The core PPI, excluding food and energy, added 0.2%.

Coming one day after data showing softer consumer inflation, the lower print on wholesale inflation suggests further moderation in consumer prices in coming months as lower producer costs work their way through the supply chain.

Following the auspicious consumer inflation data yesterday, traders increased their bets that the Fed will throttle back its aggressive rake hike campaign. Fed fund futures dropped the odds of 75-basis-point increase in September from 70% to around 40%.

But a pair of regional Fed presidents have pushed back on the dovish narrative. Charles Evans of the Chicago Fed and Neel Kashkari of Minneapolis separately said the central bank will continue to drive rates higher until consumer inflation is on its way back down to 2%.

Benchmark 10-year Treasury yields bounced back up near 2.9%, weighing on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset. The dollar was nearly flat.

The other precious metals were mixed, with silver dropping 1.8% while platinum and palladium rose 1.4% and 1.9%, respectively.

At the Comex close: December gold futures slipped $6.50 to $1,807.20; September silver dropped 38 cents to $20.35; October platinum picked up $13.30 to $959.40; and September palladium rose $42.50 to $2,288.40 an ounce.