AGE Daily Gold Update

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

8/12/2022: Gold rises for 4th straight week

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.5% to close above $1,815 despite a stronger dollar and rising risk appetite as falling inflation buoyed speculation that the Fed may to scale back the size of future rates hikes. The metal finished the week 1.5% higher for its fourth straight weekly win, the longest streak since last December.

US import prices fell 1.4% in July on lower costs for fuel, industrial supplies, and food. It was the first decline since December and the biggest since April 2020, when most of the world went into Covid lockdown.

Following lower US consumer and wholesale prices in July, the lower import prices added to optimism that the peak inflation may have passed, stoking risk appetite and speculation that the Fed may gear back somewhat on rate hikes.

Fed fund futures traders now see a 58% probability that the Fed will raise rates by 50 basis point in September, up from 32% a week ago. The odds of a third straight hike of 75 basis points have fallen from 68% before the new inflation data to 42% today.

Smaller rate hikes support gold by keeping yields low, decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset. They also keep a lid on the dollar, which helps gold by making it cheaper in other currencies.

Consumer sentiment ticked up, according to the University of Michigan survey, as Americans began to moderate their inflation expectations. But overall sentiment remains mired near all-time lows, especially among lower- and middle-income Americans, for whom higher prices have a bigger impact.

Capping gold’s rise for the day and week, US equities jumped on the dual prospect of lower inflation and smaller rate hikes. The S&P 500 and Nasdaq climber 1.5% and 2%, respectively, to post their fourth straight weekly increase. The Dow added 1%.

The other precious metals were mixed for the day by higher for the week. Silver rose 1.7% for a weekly increase of 4.3%. Platinum was near-flat for the day and 2.8% higher for the week. Palladium fell 3% today but still gained 4.3% this week.

At the Comex close: December gold gained $8.30 to $1,815.50; September silver climbed 35 cents to $20.70; October platinum edged down 90 cents to $957.40; and September palladium dropped $69 to $2,219.40 per ounce.