AGE Daily Gold Update

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

3/10/2023: Gold gains on contagion fears

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 1.8% to close above $1,867 as worries about banking contagion rallied safe-haven assets while slowing wage growth eased worries about another jumbo rate hike from the Fed, pressuring yields and the dollar. The metal rose 0.8% for the week.

The FDIC shuttered Silicon Valley Bank because of deep financial losses, sending a tremor into the banking sector and causing investors to fear contagion through counterparty risk. Treasury Secretary Janet Yellen said she is tracking a number of other banks that are also struggling.

Benchmark 10-year Treasury yields tumbled below 3.7% as investor rushed into the perceived safety of government debt. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds.

Adding to pressure on yields, the unemployment rate rose to 3.6% in February, according to the government's nonfarm payrolls report, suggesting that the labor market might be cooling despite the addition of 311,000 new jobs. Perhaps of more importance to the Fed, wage growth was merely 0.2% in February, the smallest increase in a year.

Despite the solid jobs print, rising unemployment and softening wage inflation give the Fed reason to refrain from a bigger rate hike at its meeting this month. Fed funds futures trading now projects a 41% chance of a half-point increase, down from 72% a week ago.

The dollar lost 0.7% against major rivals on the shifting rate view, boosting gold and other commodities by making them less expensive in other currencies.

The other precious metals were mixed for the day and lower for the week. Silver rose 1.7% to cut its weekly loss to 3.5%. Platinum picked up 1.4% today but lost 1.8% this week. Palladium slipped 0.9% for a weekly decline of 6%.

At the Comex close: April gold gained $32.60 to $1,867.20; May silver rose 34 cents to $20.51; April platinum added $12.90, to $962.20; and June palladium shed $12.40 to $1,362.30 an ounce.