AGE Daily Gold Update

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

6/8/2023: Gold rallies after jobless claims

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rallied 1% to close near $1,979 after rising jobless claims solidified expectations that the Fed will pause interest rates, undercutting yields and the dollar and lifting alternative stores of value.

First-time filings for unemployment rose 28,000 to 261,000, the highest level in nearly two years, according to the Labor Department. While the bulk occurred mainly in California and Ohio, increases were recorded in more than half the US states.

Benchmark 10-year Treasure yields pulled back near 3.7% as traders speculated that the Fed will be even more likely to pause interest rates when it meets next week. Lower yields boost gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar tracked lower with yields, shedding 0.7% against major rivals on the moderating rate view. A weaker dollar supports gold and other commodities by making them less expensive in other currencies, lifting overseas demand.

The other precious metals were mixed, with silver surging 3.5% while platinum and palladium lost 1% and 2.1%, respectively.

At the Comex close: August gold gained $20.20 to $1,978.60; July silver rose 82 cents to $24.35; July platinum dropped $10.70 to $1,013.90; and September palladium shed $29.60 to $1,358.30 an ounce.

6/7/2023: Gold falls to one-week low

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 1.2% to close under $1,959 as Treasury yields tracked higher following rate hikes by Canada and Australia, pressuring alternative assets. It was the metal's lowest finish in a week.

The Bank of Canada unexpectedly raised interest rates by a quarter-point to 4.75%, the highest level since 2001. The move came one day after a similar increase by the Reserve Bank of Australia, which lifted rates to an 11-year high and warned of more to come.

Back in March, the BOC became the first major central bank to pause rate hikes. But inflation has proven stickier than anticipated, forcing the central bank to reassess and resume tightening. The Fed is wary of duplicating this stop and start, leading analysts to believe the US bankers may hold a hawkish stance for longer.

Benchmark 10-year Treasury yields rose back near 3.8%, pressuring gold by increasing the opportunity cost for holding instead of bonds as a safe-haven asset.

The dollar edged slightly higher against major rivals led by Canadian and Australian dollars. A stronger dollar creates headwinds for gold and other commodities by making them pricier in other currencies.

Also weighing on the metal, China's exports tumbled in May because of falling global demand for goods, especially in developed markets. A softening economy may mean decreased retail demand for gold in the world's largest gold-consuming nation.

The other precious metals were also lower, with silver sliding 0.6% while platinum and palladium dropped 1.4% and 1.7%, respectively.

At the Comex close: August gold dropped $23.10 to $1,958.40; July silver slid 14 cents to $23.53; July platinum shed $14.10 to $1,024.60; and September palladium fell $23.90 to $1,387.90 an ounce.

6/6/2023: Gold gains for second session

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.4% to close above $1,981 despite an untick in the dollar as traders await next week's meeting of the Federal Reserve. It was the metal's second day of gains.

Following yesterday's ISM report that US services businesses grew less than forecast in May, Fed fund futures traders have increased their bets that the Fed will pause interest rates this month. CME FedWatch puts the odds of no change at 81%, up from 76% yesterday, while the likelihood of a quarter-point hike fell under 20%.

Last week's soft ISM factory data and the nonfarm payrolls report showing unemployment jumped from 3.4% to 3.7% last month is also shifting the rate view.

A pause in rate hikes is seen as supporting gold because it underscores that the US economy is slowing, which adds to safe-haven demand for the metal. And a pause keeps a lid on yields, which minimizes the opportunity cost for holding gold instead of bonds.

Gold's gains despite a mild rebound in the dollar, which added 0.1% against major rivals after the Commerce Department said US factory orders rose 0.4% in April. While the increase was less than forecasts, it was the fourth increase in five months.

The other precious metals were also higher, with silver and platinum adding 0.2% while palladium picked up 0.1%.

At the Comex close: August gold gained $7.20 to $1,981.50; July silver added 4 cents, to settle at $23.67; July platinum climbed $2.30 to $1,038.70; and September palladium edged up $1.50 to $1,411.80 an ounce.

6/5/2023: Gold gains on weak services data

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.2% to close above $1,794 after weak services-sector data increased bets that the Fed will pause rate hikes, pressuring the dollar and lifting alternative stores of value.

The ISM services index fell to a five-month low of 50.3 in May, down from nearly 52 in April. With service-related businesses like retail, healthcare, travel, and food service comprising around two-thirds of GDP, the unexpectedly low reading suggests the economy is starting to feel the weight of high interest rates.

The data follows last week's ISM report that the slump in manufacturing continues. And Friday's nonfarm payrolls data showed the unemployment rate climbing from 3.4% to 3.7% despite the 339,000 new jobs added in April.

The dollar surrendered early gains following the ISM release, slipping into the red as traders raised their bets that the Fed will pause rate hikes when it meets next week. A falling dollar typically boosts gold and other commodities by making them cheaper in other currencies.

According to CME FedWatch, Fed fund futures now project an 80% likelihood that the Fed will leave rates unchanged. One week ago, the odds of a pause were 36% against 64% for a quarter-point increase.

Benchmark 10-year Treasury yields slipped under 3.7% on the shifting rate view, supporting gold by decreasing the opportunity cost for holding it instead of gold as a safe-haven asset.

The other precious metals were mixed, with silver and palladium slipping 0.5% and 0.3%, respectively, while platinum advanced 3.3%.

At the Comex close: August gold gained $4.70 to $1,974.30; July silver dipped 11 cents to $23.64; July platinum picked up $32.90 to $1,036.40; and September palladium lost $6.80 to $1,410.30 an ounce.

6/2/2023: Gold falls, scores 1.3% weekly win

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 1.3% to close under $1,970 after robust jobs data caused yields, stocks, and the dollar to jump, undercutting alternative assets. But the metal still posted a 1.3% gain for the week.

The government nonfarm payroll report showed the economy added a whopping 339,000 new jobs in May, far more than most forecasts. Employment gains for March and April were revised higher.

But the increase in hiring was also accompanied by a surge in the unemployment rate from 3.4% to 3.7%, the biggest one-month increase since the onset of the pandemic in March 2020, and a moderation in wage growth to 0.3% for the month.

Wall Street rallied on the upbeat headline jobs number, with the Dow rising 2% while the S&P 500 gained 1.5% and the Nasdaq 1%.

The passage by the Senate of the deal to raise the debt limit, thereby averting a damaging default, also bolstered risk sentiment.

Benchmark 10-year Treasury yields climbed back above 3.7% as investors gravitated away from safety. Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar rose 0.4%, tracking higher with yields and further pressuring gold and other commodities priced in it from global trade.

The other precious metals were mixed for the day and week. Silver dropped 1% but held onto a weekly rise of 1.7%. Platinum slid 0.7% for the day and 2.4% for the week. Palladium picked up 0.9% but still lost 1.4% this week.

At the Comex close: August gold fell $25.90 to $1,969.60; July silver slid 24 cents to $23.75; July platinum dropped $6.60 to $1,003.50; and September palladium rose $12.80 to $1,403.50 an ounce.

6/1/2023: Gold gains for third session

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained another 0.7% to close above $1,995 as yields and the dollar receded on soft data and the passage of the debt-ceiling deal in the House, lifting alternative stores of value. Notching its third straight day of gains, the metal traded above $2,000 earlier in the session before slipping back on profit-taking.

The House overwhelmingly passed a bill to extend the debt ceiling and prevent a potentially catastrophic default. The deal, hammered out by President Biden and Speaker McCarthy over the holiday week, garnered bipartisan support.

US manufacturing fell again in May, with the ISM survey sliding under 47, where any reading under 50 signifies contraction. It was the seventh straight month in the negative, the longest streak since 2008-2009, during the depths of the Great Recession.

Separately, first-time jobless claims rose to a one-month high of 232,000 last week, although no major layoffs were recorded. Continuing claims rose 6,000 to 1.8 million, suggesting it is taking longer for people who are looking to find employment.

In good news for jobs, ADP said private payrolls added 278,000 new jobs in May, far more than forecast. Friday's nonfarm payrolls report will give a more reliable, and often quite different, profile of the current state of the labor market.

Benchmark 10-year Treasury yields fell to just above 3.6% on relief about the debt-ceiling and growing expectations that the Fed will not raise interest rate this month because of the weakening trend in data. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar tracked lower with yields, dropping 0.7% against major rivals. A weaker dollar lifts gold and other commodities by making them less expensive in other currencies.

The other precious metals were also higher, with silver rising 1.7% while platinum and palladium picked up 1.1% and 2,3%, respectively.

At the Comex close: August gold gained $13.40 to $1,995.50; July silver climbed 40 cents to $23.99; July platinum added $11.10, to $1,010.10; and September palladium picked up $31.70 to $1,390.70 an ounce.

5/31/2023: Gold gains on data, Fed-speak

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.3% to close at a one-week high above $1,982 as yields fell on dovish Fed jawboning and mixed US data. The metal lost 1.8% for the month, pressured by a stronger dollar.

A pair of prominent Fed officials signaled support for no rate increase at the June Fed meeting. Both Philadelphia Fed President Patrick Harker and Fed Governor Philip Jefferson said separately that the central bank should "skip" a rate hiking in June so the Fed can see more data.

The statements are a notable reversal in the generally hawkish trend in commentary coming from Fed members in recent days. Fed fund futures traders now put the odds of a June rate hike at just 33%, down from more than 66% yesterday.

Benchmark 10-year Treasury yields dropped to just above 3.61% on the shifting rate view, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Also supporting the metal, the Chicago PMI index fell another 8.1 points into the negative, marking the ninth straight month of contraction in the Midwest Fed region. And the Fed's Beige Book showed the economy cooling somewhat in May, with hiring and inflation increasing at a slower pace.

On the positive side of the data ledger, job openings rose to a three-month high in April, the Labor Department reported, signaling that the economy still has a lot of momentum to keep wages and prices elevated.

After rallying to a nine-week high early in the session on weak manufacturing data in China, the dollar fell back to nearly flat on the dovish Fed speak. The buck's impressive rebound over the past month, driven largely by a more hawkish Fed, has been a major headwind for gold and other commodities.

The other precious metals were mixed for the day and lower for the month. Silver rose 1.5% today but fell 6.5% this month. Platinum lost 2.2% for a monthly decline of 8.4%. Palladium lost 2.8% for the session and 11% for the month.

At the Comex close: August gold gained $5 to $1,982.10; July silver climbed 35 cents to $23.59; July platinum dropped $22.90 to $999; and September palladium shed $38.50 to $1,359 an ounce.

5/30/2023: Gold rises on debt-deal progress

Source: Bill Musgrave, American Gold Exchange

Austin — Gold gained 0.7% to close above $1,977 after progress in debt-ceiling negotiations pressured yields and the dollar, lifting alternative stores of value.

President Biden and Speaker McCarthy reached an agreement over long weekend to raise the debt ceiling for two years in exchange for cuts in spending. The deal must be approved by Congress, where hardliners on both sides are likely to take issue with the compromise.

Benchmark 10-year Treasury yields fell to 3.7% on optimism that the US can avoid a devastating default. Falling yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar gave up early gains to slip slightly into the red after Masato Kanda, Japan's vice finance minister for international affairs, told the BOJ that the government is prepared to intervene to support the yen. The Japanese currency rounded sharply from a six-month low against the buck on the statement.

Ongoing dollar strength has been a primary headwind for gold in recent weeks as the Fed has signaled its intention to raise interest rates further. Following last week's uptick in the PCE, the Fed's preferred inflation gauge, Fed fund futures trading now puts the odds of a June hike at 69%, up from 28% one week ago.

The other precious metals were lower, with silver sliding 0.5% while platinum and palladium dropped 0.6% and 2%, respectively.

At the Comex close: August gold rose $14 to $1,977.10; July silver slipped 12 cents to $23.24; July platinum dropped $6.20 to $1,021.90; and September palladium futures shed $28.60 to $1,397.50 an ounce.

5/26/2023: Gold posts third weekly decline

Source: Bill Musgrave, American Gold Exchange

Austin — Gold edged up less than 0.1% to close above $1,944 as worries about the debt ceiling slightly outweighed upbeat US economic data and stubborn inflation, which increased the odds of another rate hike from the Fed. The metal fell 1.9% for the week for its third straight weekly decline.

Debt-ceiling negotiations between the White House and Congress will remain at an impasse for long holiday weekend, with "major issues" still in the way of an agreement, according to a Republican spokesperson.

While the markets expect a deal to be reached before a catastrophic default in early June, damage to the economy may be unavoidable. Fitch rating service warned of a potential downgrade in US credit because of the brinksmanship so far.

Gold rallied as high as $1,957 in intraday trading on safe-haven demand due to debt-ceiling uncertainty before robust US data and rising inflation caused its retracement to a small closing gain.

According to the PCE index, the cost of goods and services rose 0.4% in April, lifting the yearly inflation rate to 4.4% from 4.2% in March. The annual core rate, less food and energy, rose to 4.7% from 4.6% the month before. The PCE is the Fed's preferred gauge.

In addition, consumer spending jumped 0.8% in April, doubling forecasts, for the biggest increase in three months. The robust print shows signals solid momentum in the economy despite higher interest rates and tighter lending. Consumer spending accounts for roughly 70% of GDP.

The combination of sticky inflation and strong data has increased the chances that the Fed will continue to raise interest rates. Fed fund futures trading now sees a 71% likelihood of a quarter-point hike in June, up from 50% yesterday.

The dollar and yields were essentially flat for the day but higher for the week.

The other precious metals were higher for the day and mixed for the week. Silver rose 2% for the session but fell 2.9% for the week. Platinum added 0.2% today but lost 4.4% this week. Palladium picked up 0.6% for a weekly rise of 6.4%.

At the Comex close: June gold added 60 cents, to $1,944.30; July silver rose 45 cents to $23.36; July platinum picked up $1.80 to $1,028.10; and September palladium climbed $7.90 to $1,426.10 an ounce.

5/25/2023: Gold falls to two-month low

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 1.1% to close under $1,944 after upbeat data fueled additional rate-hike bets, boosting yields and the dollar, while progress on the debt ceiling reduced demand for safe havens. It was the metal's lowest finish in two months.

Initial jobless claims rose by less than forecast last week while totals from the week before were revised sharply lower, signaling residual strength in the labor market. And first-quarter GDP was revised up to 1.3% from 1.1%, suggesting the economy is more resilient to the pressures of rate hikes than previously thought.

Following a string of hawkish comments from Fed officials this week, the upbeat data is causing traders to raise their bets on additional rate hikes. Fed funds futures are now evenly split at 50/50 on a quarter-point increase in June, followed by a 20% likelihood of a similar hike in July.

Benchmark 10-year Treasury yields pushed back above 3.8% on the shifting rate view, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking higher with yields, the dollar rallied for a fourth session to a fresh two-month high against major rivals. The euro fell sharply after GDP for Germany, the biggest economy in the EU, fell 0.3% in Q1. A stronger dollar pressures gold and other commodities by making them pricier in other currencies.

Also weighing safe-haven demand, the White House and Congress reported progress on debt-ceiling negotiations, lowering the likelihood of a catastrophic default. But Fitch Ratings said the brinkmanship so far has placed the top triple-A rating of the US on "rating watch negative," the first step to downgrading.

Fannie Mae forecasters say the US will enter a "moderate recession" in the second half of the year as the higher interest rates and tighter lending take their toll.

The other precious metals were mostly lower, with silver and platinum dropping 1.4% and 0.3%, respectively, while palladium picked up 1.3%.

At the Comex close: June gold dropped $20.90 to $1,943.70; July silver slid 33 cents to $22.91; July platinum dipped $3.20 to $1,026.30; and June palladium rose $17.50 to $1,415.60 an ounce.