AGE Daily Gold Update

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

3/23/2023: Gold rallies to one-year high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rallied 2.4% to close near $1,996 as Treasury yields fell after the Fed signaled that it might pivot away from monetary tightening in the wake of recent bank failures. It was the metal's highest finish in more than a year.

The Fed raised interest rates by a quarter-point yesterday to a range between 4.75% and 5%, the highest level in 15 years, as it tries to stifle inflation. However, the accompanying policy statement included notable changes telegraphing the possible end of rate hikes.

In statements over the past year, the central bank has prepared the markets for higher rates by stating explicitly that "ongoing increases" would be necessary. In the current statement, this language was replaced by the much-softer suggestion that "some additional firming may be appropriate."

More to the point, the Fed's dot-plot forecast of future rates hikes was revised lower to indicate only one more increase this year.

In post-meeting comments, Fed Chair Powell cited uncertainty in the banking system caused by the abrupt failures of SVB and others as the reason to tread softly, explaining that tighter credit conditions and slower growth are likely to ensue.

Along those lines, Moody's Investor Services warned today that turmoil in the banking system is at risk of spilling over into the economy as a whole, "unleashing greater financial and economic damage than we anticipated."

Benchmark 10-year Treasury yields retreated under 3.4% on the dovish indicators and flights to safety, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The other precious metals were mostly higher, with silver and platinum rising 2.1% and 0.6%, respectively, while palladium shed 0.9%.

At the Comex close: April gold gained $46.30 to $1,995.90; May silver rose 47 cents to $23.26; April platinum picked up $5.90 to $992.90; and June palladium dropped $12.90 to $1,432.80 an ounce.