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


9/20/2021: Gold rallies on Evergrande fears

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rallied 0.7% to close near $1,764 as the near-collapse of a major Chinese property company triggered fears of global financial contagion and stoked demand for safe-haven assets.

Evergrande, China's second-largest property developer, is expected to miss debt payments this week and next, putting it in danger of default within 30 days. A key player in China's heavily leveraged real-estate sector, which constitutes nearly 30% of the Chinese economy, Evergrande carries some $300 billion in debt owned by major financial companies around the world.

Worried that an Evergrande default could deepen the economic slowdown in China and even trigger a global debt crisis like the collapse of Lehman Bros in 2008, traders bailed out of risk assets in favor of safe-haven assets like US Treasury notes and gold.

The Dow, Global Dow, and S&P 500 all tumbled more than 1.7% on the default concerns while the Nasdaq dumped 2.1%.

Also supporting risk-off sentiment, the Fed begins its two-day meeting on monetary policy tomorrow, with many analysts expecting signals that reductions in bond purchases, known as quantitative easing, may begin later this year. The Fed has been buying $120 billion in bonds every month during the pandemic, flooding the economy with cheap cash to promote lending and spending.

Benchmark 10-year Treasury yields suffered their daily drop since August as investors snapped up government bonds. Yields move inversely to bond prices.

Capping gold's gains, the dollar edged up 0.1% against major rivals as Forex traders, too, sought safety. A rising dollar tends to weigh on gold and other commodities by making them pricier in other currencies.

The other precious metals were lower, with silver slipping 0.6% while platinum and palladium fell 3.4% and 5.9%, respectively.

At the Comex closed: December gold gained $12.40 to $1,763.80; December silver lost 13 cents to $22,20; October platinum fell $31.40 to $899.20; and December palladium tumbled $118.60 to $1,865.20 an ounce.


9/17/2021: Gold slides again on taper view

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slipped another 0.3% to close at a five-week low under $1,752 as the dollar and Treasury yields continued to climb on the prospect of reduced monetary stimulus from the Fed. The metal suffered its third straight weekly decline, dropping 2.3% for the week.

Following a spate of positive economic reports this week, capped by data showing US retail sales jumping unexpectedly in August, the markets now expect the Fed to begin tapering monetary stimulus by the end of the year. More than 60% of economists surveyed by Reuters expect reductions to begin in December.

By tapering its $120 billion per-month bond-buying program, sometimes called quantitative easing, the Fed effectively reduces the number of dollars it releases into circulation. The end of QE is considered a prerequisite to raising interest rates.

Whether the Fed announces any change in direction at its meeting next week is anyone's guess. But traders are already positioning for this first, small step toward policy normalization, and the shift in sentiment is having a bullish effect on the dollar to the detriment of gold.

Extending yesterday's 0.5% rise, the dollar added another 0.3% against major rivals to reach a fresh three-week high. A stronger dollar tends to pressure gold and other commodities priced in it for global trade by making them more expensive overseas.

Benchmark 10-year Treasury yields also crept higher on the taper view, creating a further headwind for gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

US consumer sentiment edged up slightly in September, according to the University of Michigan survey, but remained near a 10-year low as Americans fret about higher inflation and the spread of the Delta variant.

The other precious metals were mixed for the day but lower for the week. Silver fell another 2% for a weekly loss of 6.5%. Platinum rose 0.8% but still lost 2.7% on the week. Palladium dropped 1.9% today and 6.7% this week.

At the Comex close: December gold slid $5.30 to $1,751.40; December silver dropped 46 cents to $22.34; October platinum picked up $7.30 to $930.60; and December palladium fell $37.70 to $1,983.80 an ounce.


9/16/2021: Gold falls sharply on upbeat data

Source: Bill Musgrave, American Gold Exchange

Austin — Gold fell 2.1% to close under $1,757 after a spate of upbeat economic data lifted the dollar and Treasury yields, triggering a technical selloff resulting in the metal's biggest one-day decline in nearly six weeks.

US retail sales jumped 0.7% in August, far more than expected, in another sign that the economy is recovering despite the aggressive spread of the Delta variant. Most forecasts pointed to a decline of around 0.7% for the month. Retail sales are now 15% higher than one year ago.

The Philly Fed factory index surged more than 12 points in August to nearly 31, following four months of declines. The reading comes one day after the Empire State index posted an even stronger recovery to more than 34, where any reading over zero indicates expansion.

The strong data shifted the market view on whether the Fed may announce a taper of quantitative easing when it meets on monetary policy next week. After the surprisingly weak nonfarm payrolls report showed just 225,000 jobs were added by the economy in August, many economists were expecting the Fed to push its taper announcement off until November. Now, a September announcement is squarely back on the table.

The dollar rose 0.5% to a three-week high on the changing taper view, pressuring gold by making it more expensive in other currencies. Tapering QE buys the dollar by bringing the Fed closer to tightening monetary policy by raising interest rates, which makes the buck more attractive to Forex traders seeking higher yield.

Benchmark 10-year Treasury yields also rose, increasing the opportunity cost for holding gold instead of bonds as a safe-haven asset. Once the gold price began to slide, automatic stop-loss sales were triggering, propelling the meal lower in a bout of technical selling.

The other precious metals were mostly lower, with silver and platinum falling 4.2% and 0.8%, respectively, while palladium picked up 1.5%.

At the Comex close: December gold dropped $38.10 to $1,756.70; December silver shed $1.01 to $22.79; October platinum slid $7.20 to $923.30; and December palladium rose $29.90 to $2,021.50 an ounce.


9/15/2021: Gold slides on rising risk appetite

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 0.7% to close under $1,795 after upbeat US data stoked risk appetite, prompting traders to take profits from the metal's two-day rise to nearly a two-week high.

The New York Fed's Empire State index of business conditions jumped 16 points to 34.3 this month, roughly twice most forecasts, signaling a robust rebound in this key manufacturing region. Any reading over zero indicates expansion.

Separately, US national factory output rose 0.4% in August for its sixth straight monthly gain. Slightly below forecasts, the rise was hampered by Hurricane Ida, which most analysts believe lopped around 0.3% off the total.

US import prices fell for the first time in 10 months, another indication that the inflation surge of the first half of the year may be subsiding. Despite August's 0.3% decline, prices for imported goods have still risen 9% in the past year, although the increases have slowed over the past three months.

Wall Street cheered the positive data, with all three major indexes gaining more than 0.8%. Benchmark 10-year yields rose back above 1.3% on the sharpened risk appetite. The dollar was little changed, edging up less than 0.1%.

Rising yields weigh on gold by increasing the opportunity cost of holding it instead of bonds as a safe-haven asset. A stronger dollar is also a headwind because it makes the metal more expensive in other currencies, undercutting overseas demand.

Gold rallied yesterday after a softer-than-expected CPI print suggested that, with inflation moderating, the Fed may feel less urgency to announce a taper of quantitative easing when it meets next week. Today's report of decreasing import prices reinforces that idea but also suggests the global economy may be returning to normal, lifting risk sentiment to gold's detriment.

The other precious metals were mostly lower, with silver and platinum losing 0.4% and 0.9%, respectively, while palladium added 0.8%.

At the Comex close: December gold slid $12.30 to $1,794.80; December silver dropped, 8 cents to $23.80; October platinum lost $8.20 to $930.50; and December palladium picked up $16 to $1,991,60 an ounce.


9/14/2021: Gold jumps on soft CPI report

Source: Bill Musgrave, American Gold Exchange

Austin — Gold jumped 0.7% to close above $1,807 after softer than expected consumer inflation pressured bond yields and the dollar, lifting alternative stores of value.

Consumer inflation rose in August at the slowest pace in seven months, suggesting that the big spike in prices caused by Covid-related issues may have passed. The Consumer Price Index added 0.3 while the core CPI, excluding volatile food and energy costs, added just 0.1%.

Benchmark 10-year Treasury yields retreated as traders speculated that weaker inflation will give the Fed additional time before reducing the asset purchases known as quantitative easing. Most analysts now expect the central bank to announce the taper in November rather than later this month, as previously expected.

Ongoing quantitative easing bids up prices on mid- and long-term government debt, pressuring yields. In turn, lower yields help gold by reducing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar also slid after the CPI print, supporting gold by making it less expensive in other currencies. A deferral of tapering would imply interest rates are likely stay lower for longer, since the first step toward raising rates is ending QE altogether.

The other precious metals were mixed, with silver adding 0.4% while platinum and palladium fell 2% and 5%, respectively. The platinum metals group has been hit hard by supply-chain blockages that have reduced the manufacturing of cars and trucks, the main industrial use for the metals.

At the Comex close: December gold gained $12.70 to $1,807.10; December silver added 9 cents, to $23.89; October platinum dropped $18.80 to $938.70; and December palladium tumbled $104.20 to $1,975.60 an ounce.


9/13/2021: Gold rises with inflation expectations

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose 0.1% to close above $1,794 as higher inflation expectations and rising oil prices stoked demand for inflation hedges despite a stronger dollar.

The New York Fed reported one-year and three-year consumer inflation expectations increased for the tenth straight month in August. Consumers now expect prices to rise 5.2% over the next year and 4% over the next three years. Both figures are the highest since the Fed survey was launched in 2013.

With inflation in mind, more Fed members have joined the choir to reduce the bond-buying program known as quantitative easing later this year. The August Consumer Price Index report, due out tomorrow, should give further clues to whether a taper will be announced at the September Fed meeting.

Since the pandemic began, the US central bank has been far more interested in healing the labor market than curtailing inflation, which it has largely dismissed as a temporary result of societal re-openings and supply-chain blockages. The surprisingly weak payrolls report for August, which showed merely 235,000 new jobs added, may encourage the Fed to delay the taper until more jobs data are available.

Separately, a key measure of inflation expectations in the eurozone rose to the highest level in six years. The ECB announced last week that it will begin to slow asset purchases through one of its quantitative easing mechanisms, the so-called Pandemic Emergency Purchase Program, or PEPP.

Benchmark 10-year Treasury yield edged lower as bond traders weighed the likelihood of an imminent taper against the softening labor market and spread of the Delta variant against. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Also supporting gold, crude prices rose above $70 per barrel for the first time in six weeks on supply concerns because of Hurricane Ida. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The dollar edged higher on the US inflation expectations, limiting gold's gains by making it more expensive in other currencies.

The other precious metals were mixed, with platinum adding 0.1% while silver and palladium slipped 0.4% and 2.2%, respectively.

At the Comex close: December gold gained $2.30 to $1,794.40; December silver dropped a dime to $23.80; October platinum picked up $1 to $957.50; and December palladium fell $46.50 to $2,079.80 an ounce.


9/10/2021: Gold slides on Fed taper outlook

Source: Bill Musgrave, American Gold Exchange

Austin — Gold inched down 0.1% to close under $1,798 as Treasury yields and the dollar rose on persistent wholesale inflation, pressuring alternative stores of value. The metal fell 2% for the week, its first weekly decline since early August.

US producer prices rose 0.7% in August for an increase of 8.3% over the past 12 months, the most since 2010. Core producer prices, factoring out volatile food and energy, rose 0.3% for the month and 6.3% over 12 months.

With the pandemic continuing to pressure supply chains, higher wholesale prices are becoming the norm, a reality that is prompting more Fed officials to call for tighter policies. Both Cleveland Fed President Loretta Meister and Fed Governor Michelle Bowman said today that quantitative easing should be tapered this year.

Benchmark 10-year Treasury yields jumped to 1.335% on the inflation data. While rising inflation typically supports a higher gold price, higher yields tend to weigh on the metal by increasing the opportunity cost of holding it instead of bonds as a safe-haven asset.

The dollar added 0.1% against major rivals to hover near a 9-month high as traders speculated that the Fed may announce taper plans in September, to begin late this year. A stronger dollar undercuts gold by making it more expensive in other currencies, curtailing overseas demand.

The other precious metals were lower for the day and week. Silver dropped 1.2% for a weekly decline of 3.6%. Platinum slid 0.3% for the session and 4.9% for the week. Palladium slid 0.8% for a loss of 10% this week.

At the Comex close: December gold dipped $2.30 to $1,797.70; December silver fell 28 cents to $23.90; October platinum lost $18 to $971.40; and December palladium dropped $16.50 to $2,621.30 an ounce.


9/9/2021: Gold retakes $1,800 after ECB

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose 0.4% to close at $1,800 as ECB tightening pressured the dollar, Treasury yields, and the stock market, spurring demand for alternative assets.

The European Central Bank said today that it will modestly reduce the monthly purchases of bonds because of generally improving financial conditions and rising inflation the in EU. Known as the pandemic emergency purchasing program, or PEPP, the ECB's version of quantitative easing is targeted to total 1.85 trillion euro through March 2022.

The dollar fell 0.2% against major rivals led by the euro as Forex traders were drawn toward ECB's relatively quicker monetary tightening. The Fed is still on the fence about when to taper QE. A weaker dollar supports gold and other composites by making them less expensive overseas.

Benchmark 10-year Treasury yields pulled back under 1.29% on the central bank policy differential and lingering worries about the Delta variant's effect on the recovery. Lower yields support gold by reducing the opportunity cost for hold it instead of bonds as a safe-haven assets.

The Dow, S&P 500, and Global Dow all slipped 0.3% on the prospect that the ECB's move may push the Fed to follow suit and start to remove the punchbowl of easy money.

Gold's gains were capped by a sharp drop in initial jobless claims, which fell under 310,000 last week for the first time since the pandemic struck.

The other precious metals were mixed, with silver adding 0.5% while platinum and palladium fell 0.2% and 4.2%, respectively.

At the Comex close: December gold gained $6.50 to $1,800; December silver added 12 cents, to $24.18; October platinum dropped $1.60 to $974.50; and December palladium lost $94.50 to $2,142.80 an ounce.


9/8/2021: Gold slips on stronger dollar

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slipped 0.3% to close under $1,794 as the dollar rose behind strong bond yields and the possibility that the Fed might taper quantitative easing as early as next month.

St. Louis Fed President James Bullard said again that the central bank should move towards reducing pandemic-related support by cutting the bond-buying program known as quantitative easing, perhaps at the Fed's September meeting.

Momentum in the economy will drive an improving labor market despite last month's nonfarm payrolls report showing a paltry 225,000 new jobs added, Bullard said. In addition, failure to scale back the $120 monthly bond purchases soon will accelerate inflation, in his view.

New York Fed President John Williams pushed back on the early taper call, however, stating that the labor market has yet to cross the threshold to where it no longer needs help. Williams is currently a voting member of the FOMC whereas Bullard is not.

Tantamount to printing money, quantitative easing supports gold by pressuring bond yields. Scaling it back, conversely, could pressure the gold price by lifting yields and increasing the opportunity cost for holding the metal.

Benchmark 10-year Treasury yields dipped slightly from its highest level in two months as bargain hunters swept to buy undervalued government debt. The Fed's Beige Book, released late in the session, also prompted some safe-haven buying as economic activity last month slowed to moderate in much of the country because of the Delta variant.

The dollar rose 0.2% against major rivals, especially the euro, ahead of tomorrow's meeting of the European Central Bank. A rising dollar weighs on gold by making it more expensive overseas.

The other precious metals were also lower, with silver dropping 1.3% while platinum and palladium fell 2% and 4.9%, respectively.

At the Comex close: December gold slipped $5 to $1,793.50; December silver dropped 32 cents to $24.06; October platinum fell $19.80 to $976.10; and December palladium shed $116.20 to $2,237.30 an ounce.


9/7/2021: Higher treasury yields pressure gold

Source: Dana Samuelson, American Gold Exchange

Austin — Treasury yields and the dollar gained Tuesday, pressuring gold lower once markets reopened following the long Labor Day weekend. Foreign interest in U.S. bonds surged during Tuesdays $58 billion three-year treasury note auction, boosting yields and the dollar in the process. Bargain hunting repositioning from the euro into the dollar, which hit one-month highs and lows respectively following Friday’s dismal jobs report, were cited as reasons for the dollars gains. In addition, traders have now had a chance to look past the weakest job gains in seven months at underlying data in Friday’s jobs report that remained fairly strong, including a 0.6% wage gain, that was double market expectations, helping to boost yields and the greenback off of recent lows. These gains inversely pushed gold lower, and back under $1,800, giving back all of Friday’s jobs dismal report gains.

U.S. economic activity in Q3 is clearly slowing, with GDP estimates now anticipating growth of under 4% for Q3, down considerably from its scorching pace of 6.3% in Q1 and 6.6% in Q2, 2021. Some analysts are now indicating that the US economic recovery in 2021 may have already peaked. Despite this economic softening, the U.S. economy remains relatively stronger than the Euro economy, helping to boost the short-term move out of euros and into dollars.

At the Comex close: December gold fell $37.40 to $1,796.30; December silver fell 41 cents to close at $24.39; October platinum dropped $27.40 to $994.20; and December palladium shed $50.80 to $2,365.50 per ounce.

  

Metal Ask      Change
Gold $1,767.44           Price Change Up Arrow $10.11
Silver $22.39           Price Change Down Arrow $-0.12
Platinum $918.65           Price Change Down Arrow $-29.40
Palladium $1,921.29           Price Change Down Arrow $-124.92
In US Dollars

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