AGE Daily Gold Update

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

3/8/2023: Gold dips on Powell rate view

Source: Bill Musgrave, American Gold Exchange

Austin — Gold edged down 0.1% to close under $1,819 as traders digest Jerome Powell's second day of Congressional testimony and await Friday's important nonfarm payrolls report.

Reiterating yesterday's hawkish message to the Senate Banking Committee, the Fed Chair told the House Financial Services panel today that additional rate hikes and a higher terminal rate are likely as the economy grapples with stubborn inflation.

Whereas yesterday's remarks unnerved markets by hinted at the possibility that "faster increases," meaning bigger steps than January's quarter-point hike, today's brought some reassurance by emphasizing that hikes are not on a "preset path" and would be data driven.

The next major data point is this Friday's jobs report. Analysts are projecting around 225,000 new jobs were added in February. If the number comes in anywhere near January's 517,000, the odds of a 50-basis point hike this month would dramatically increase.

The less authoritative ADP report today showed private payrolls added 242,000 jobs last month, more than expected and far beyond January's 119,000

In other data, the Fed's Beige Book recorded no growth in six of the Fed's 12 regions last month, with modest growth in the others.

Benchmark 10-year yields were little changed while 2-year yields crept higher above 5%, further inverting the spread between 2-year and 10-year yields to most since September 1981. A deeply inverted yield curve is considered one of the bond market's most reliable gauges of impending recession.

The dollar was little changed, holding near a three-moth high on the prospect of higher interest rates. A strong dollar weighs on gold and other commodities by making them pricier in other currencies.

The other precious metals were mostly lower, with silver and palladium dropping 0.2% and 0.6%, respectively, while platinum picked up 0.5%.

At the Comex close: April gold dipped $1.40 to $1,818.60; May silver dropped a nickel to $20.15; April platinum added $4.30, to $940.60; and June palladium slid $8.50 to $1,332.10 an ounce.