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


5/17/2021: Gold surges to 4-month high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold surged 1.6% to close at a four-month high above $1,867 as softer data in China and the US pressured stocks and the dollar, driving investors into alternative stores of value. The metal pushed above its 200-day moving, a bullish move following two straight weeks of rising weekly prices.

China's factory output slowed in April and retail sales rose much less than forecast, suggesting the recovery in the world's second-largest economy may be leveling off after an initial surge. At the same time, supply bottlenecks and sharply higher raw materials has driven China's factory inflation to the highest level in since late 2017.

Here at home, recent weakness in economic data has put a check on optimism that the recovery will be go smoothly. Job gains in April fell abysmally short of forecasts while retail sales floundered without another transfusion of fiscal stimulus. The Empire State manufacturing index slipped from the March high.

Meanwhile, US consumer inflation has risen by the most since 2009 and annualized wholesale inflation is the highest since 2008. All three major US stock indexes rolled back, with the Dow and S&P 500 falling 0.2% while the Nasdaq lost 0.4%.

A growing chorus of Fed officials insist, however, that the inflation spike is transitory and will have no effect on monetary policy. Atlanta Fed President Earl Bostic and Fed Vice Chair Richard Clarida stated separately today that the economy is nowhere near benchmarks that would prompt a reduction in quantitative easing or rate tightening.

Bond investors are getting the message, with benchmark 10-year Treasury yields remaining little changed around 1.65% as prematurely higher interest rates are no longer being aggressively priced into the market. Speculation among bond traders that inflation would force the Fed to break its pledge to keep rates near zero through 2023 drove yields higher—and gold lower—in March and April.

Flat yields and rising inflation are a bullish combination for gold, spurring safe-haven demand without the impediment of rising opportunity cost for holding a non-yielding asset instead of bonds.

The dollar dipped around 0.2% against major rivals, supporting gold and other commodities priced in it for global trade by making them less expensive in other currencies.

The other precious metals were also higher, with silver and platinum jumping 3.3% and 1.8%, respectively, while palladium edged up 0.1%.

At the Comex close: June gold surged $29.50 to $1,867.60; July silver jumped 91 cents to $28.27; July platinum climbed $21.70 to $1,244.50; June palladium licked up $1.30 to $2,895.90 an ounce.


5/14/2021: Gold rallies to fresh 3-month high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose for a second session, adding 0.8% to close above $1,838, as weak consumer data eroded bonds yields and the dollar, lifting demand for alternative stores of value. The metal picked up 0.4% for the week to finish at its highest price since February 10.

Consumer sentiment fell to a three-month low in April, according to the University of Michigan index, with rising consumer prices causing Americans to worry about their future financial wellbeing.

Separately, retail sales were flat in April as the stimulus boost from the month before faded. March sales had risen sharply after the government sent $1,400 relief checks to most households.

With consumer spending accounting for some two-thirds of GDP, the disappointing sales and sentiment data this month signal just how dependent on fiscal support the economy remains.

Benchmark 10-year Treasury yield fell as investors became less concerned that rising prices will prompt the Fed to curtail monetary stimulus prematurely. A chorus of Fed members came forward this week to reassure the markets that interest rates will remain near zero for the foreseeable future.

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, losing 0.5% against major rivals, as the weak data lessened the likelihood of monetary tightening. A falling dollar supports gold and other commodities by making them less expensive in other currencies, lifting demand overseas.

The other precious metals were higher for the day and lower for the week. Silver gained 1.1% today but slid 0.4% this week. Palatinum was 1.4% higher for the session but 2.5% lower for the week. Palladium added 1.1% to trim its weekly loss to 1%.

At the Comex close: June gold gained $14.10 to $1,838.10; July silver rose 31 cents to $27.37; July platinum picked up $16.30 to $1,222.80; and June palladium climbed $30 to $2,894.60 an ounce.


5/13/2021: Gold rises as yields recede

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose 0.1% to close at $1,824 as Treasury yields pulled back despite sharply higher wholesale prices, lifting demand for the metal as a hedge against inflation.

The US Producer Price Index jumped 0.6% in April, more than forecast, as Covid-related supply shortages drove up the cost of many farm crops, raw materials, and finished goods used to produce consumer items.

One day after consumer inflation posted its biggest annual rise since 2008 at 4.2%, the wholesale inflation for the past 12 months increased to 6.2%, the most since 2009, signaling yet higher consumer prices in the pipeline.

Prominent Fed members have stepped forward to reassure the markets that the cash spigots will continue to flow. Richard Clarida, the Fed's Vice Chair, said yesterday that the central bank will need to see "substantial further progress" in job growth before considering tighter policies.

Striking a similar note, Fed Governor Christopher Waller said today that inflation will unwind once the global recovery hits its stride, and the US economy needs continued support in the meantime.

Despite the wholesale inflation print, benchmark 10-year Treasury yields pulled back slightly from five-week highs as traders digested the Fed's reassurances. Lower yields support gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Wall Street shrugged off the PPI data, rebounding sharply from yesterday's sell-off. The Dow and S&P 500 both added 1.6% while the Nasdaq rose 1%.

The other precious metals were mixed, with silver and platinum sliding 0.7% and 1.6%, respectively, while palladium rose 0.6%.

At the Comex close: June gold added $1.20, to $1,824; July silver slid 19 cents to $27.06; July platinum fell $19.40 to $1,206.50; and June palladium picked up $15.60 to $2,864.60 an ounce.


5/12/2021: Gold slides after higher CPI

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 0.7% to close under $1,823 after higher consumer inflation spurred a sharp rise in bond yields and the dollar, pressuring alternative stores of value.

The Consumer Price Index surged 0.8% in April behind pandemic-related supply shortages and rising demand for goods and services as vaccinations accelerate and society reopens. It was the biggest monthly rise in the CPI since 2009. Year-over-year inflation rocketed from 2.6% in March to 4.2% in April, the highest level since 2008.

Separately, real earnings—or earnings adjusted for inflation—were flat in April.

Benchmark 10-year Treasury yields jumped to a two-week high above 1.69% as investors dumped lower-yielding bonds to prevent erosion in returns for tying up money for long periods.

Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset. But rising inflation is typically supportive for gold in the longer term in its traditional role as an inflation hedge.

The dollar rallied 0.7% on the CPI data on speculation that the Fed will be forced to choke off inflation by raising interest rates prematurely. Money markets have priced in a quarter-point increase by December 2022, nearly a year before Fed guidance. A stronger dollar pressures gold by making it more expensive in other currencies.

Helping to limit gold's drop, US equities stumbled, with all three major indexes losing more than 2%.

The other precious metals were also lower, with silver dropping 1.5% while platinum and palladium lost 1.2% and 2.6%, respectively.

At the Comex close: June gold slid $13.30 to $1,822.80; July silver fell 42 cents to $27.24; July platinum lost $15.30 to $1,225.90; and June palladium shed $77.20 2.6% to $2,849 an ounce.


5/11/2021: Gold edges down on higher yields

Source: Bill Musgrave, American Gold Exchange

Austin — Gold edged down 0.1% to close above $1,836 as Treasury yields edged higher on inflation expectations despite falling stocks and a weaker dollar. It was the metal's first loss in five sessions as it pulled back from near a three-month high.

Factory prices in China accelerated at the fastest pace since late 2017 in April, and the nation's producer price index surged 6.8% from a year ago, setting the stage for significantly higher consumer prices in economies like the US that depend on Chinese imports.

With traders bracing for sharply higher inflation when the US Consumer Price Index is released tomorrow, the Dow lost nearly 1.4% and the S&P 500 slid nearly 1%.

Benchmark 10-year Treasury yields edged up despite the risk-off sentiment on worries about inflation. Higher yields create headwinds for gold by increasing the opportunity cost for holding the metal, even though it typically rises in inflationary environments as a hedge against higher prices.

The dollar dipped to a new 10-week low on expectations that higher inflation will reduce its purchasing power. A weaker dollar supports gold and other commodities priced in it for global trade by making them less expensive overseas.

In a normal economic climate, rising inflation would support the dollar because it leads to higher interest rates, which in turn attract Forex investors seeking higher yields. But the Fed has repeatedly pledged to leave interest rates unchanged despite any surges in inflation this year.

The other precious metals were mostly lower, with platinum and palladium dropping 1.4% and 1.9%, respectively, while outlier silver rose 0.7%.

At the Comex close: June gold dipped $1.50 to $1,836.10; July silver rose 18 cents to $27.67; July platinum dropped $23.30 to $1,241.20; and June palladium lost $42 to $2,926.20 an ounce.


5/10/2021: Gold rallies as dollar slide continues

Source: Matt Warden, American Gold Exchange

Austin — Gold picked up another 0.9% to close at a 2.5-month high above $1,831 on Monday, buoyed largely by the continued slide in the US dollar to a 2.5-month low as questions persist around the ramifications of the extremely disappointing April U.S. Jobs report released last Friday.

Under Jerome Powell's chairmanship, the Federal Reserve has repeatedly emphasized monetary policy would focus on fostering conditions to achieve maximum sustained employment even at the temporary expense of stable prices. Amid higher inflation concerns and improving economic conditions so far in 2021, the surprisingly weak jobs report reset expectations the Federal Reserve would need to announce an early taper of its $80 billion per month in US Treasury securities and $40 billion per month of agency mortgage-backed securities purchases.

Talking points emerged from both sides of the isle regarding President Biden's spending and tax plans over the weekend, too, with Republican policymakers questioning whether recent fiscal policy is creating conditions that discourage a return to work, while Democratic policymakers argued the weak April job growth reinforced their assertions that more support is needed. Benchmark 10-year US Treasury securities responded to the fiscal policy uncertainty with lower yields Monday, further supporting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The other precious metals were mixed today, with silver unchanged while platinum and palladium rose 0.6% and 1.8%, respectively.

At the Comex close: June gold gained $15.90 to $1,831.30 an ounce; July silver was unchanged at $27.48 per ounce; July platinum picked up $7.50 to $1,265.50 per ounce; and June palladium surged $52.70 to $2,968.20 an ounce.


5/7/2021: Gold rallies on weak jobs report

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rallied another 0.9% to close at a fresh 12-week high above $1,831 after disappointing jobs data hammered Treasury yields and the dollar, boosting demand for alternative stores of value. The metal finished the week with a gain of 3.6%, its biggest weekly win since last November.

The US created merely 266,000 new jobs in April, according to the Labor Department's nonfarm payrolls report, far below forecasts of around a million jobs. The extremely disappointing total cast doubt on a rapid recovery in labor markets.

Despite increasing vaccinations and momentum in the economy, employers are struggling to fill openings outside of so-called leisure and hospitality businesses like hotels and restaurants. Employment declined in retailing, manufacturing, and transportation.

The dollar plunged 0.7% to a two-month low as Forex traders speculated that the jobs report will reinforce the Fed's intention to maintain extremely easy monetary policy for a long time to come. A weaker dollar supports gold and other commodities by making them less expensive in other currencies, lifting demand overseas.

Benchmark 10-year Treasury yields plummeted on the report, lifting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The other precious metals were mixed for the day and week. Silver was flat today but jumped 6% this week. Platinum dipped 0.4% but rose 4% this week. Palladium fell 0.8% for a weekly loss of 1%.

At the Comex close: June gold gained $15.60 to $1,831.30; July silver was unchanged at $27.48; July platinum dipped $3.10 to $1,254.50; and June palladium dropped $22.30 to $2,925.10 an ounce.


5/6/2021: Gold rockets to 12-week high

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rocketed past the psychologically-important $1,800 threshold, rallying 1.8% to close near $1,816, as upbeat data combined with falling yields and a weaker dollar to stoke demand for alternative stores of value. It was the metal's highest finish in 12 weeks.

First-time applications for unemployment benefits fell below 500,000 last week for the first time since the pandemic began, reflecting a resurgence in hiring behind accelerating vaccinations and the widespread lifting of regional restrictions.

With the economy building momentum, US nonfarm productivity rose at an annual rate of 5.4% in the first quarter after declining sharply in Q4 of last year. At the same time, unit labor costs increased 5.6% as workers received higher wages for more hours worked.

Wall Street cheered the data, with Dow and S&P 500 jumping nearly 1% each while the Nasdaq added 0.4%.

Despite the rising risk sentiment, benchmark 10-year Treasury yields declined to under 1.57% as bond traders become increasingly convinced that the Federal Reserve has no plans to raise interest rates or taper quantitative easing anytime soon. Falling yields support gold by decreasing the opportunity cost of holding it instead of bonds.

Yields spiked higher earlier this year, pressuring gold, after traders convinced themselves that rising inflation would push the Fed to tighten monetary policy. In recent weeks, a long line of FOMC members have come forward to refute that notion, emphasizing the Fed's intention of letting inflation run high for a sustained period to achieve full employment.

Rising inflation and low bond yields are the ideal environment for gold, which is sought as protection against loss of purchasing power and over-valued equities.

The dollar fell 0.4% against major rivals on rising risk appetite, further supporting gold and other commodities by making them less expensive in other currencies, lifting overseas demand.

The other precious metals were mostly higher, with silver leaping 3.8% and platinum 2.3% while palladium slipped 0.9%.

At the Comex close: June gold gained $31.40 to $1,815.70; July silver climbed 96 cents to $27.48; July platinum picked up $28.80 to $1,257.60; and June palladium dropped $25.40 to $2,947.40 an ounce.


5/5/2021: Gold rises with rate reassurance

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose 0.5% to close above $1,784 as yields dipped after Janet Yellen retracted her comments from yesterday about higher interest rates, and key data fell short of forecasts.

Treasury Secretary Yellen "clarified" yesterday's statement that interest rates would likely have to rise to prevent the economy from overheating. The comment had scrambled the markets, spurring a retreat in equities and commodities, both of which are adversely affected by higher rates.

Today, Yellen mollified the markets by walking back that comment, asserting that she does not advocate higher rates and does not see inflation as a sustained problem for the recovery.

Two prominent Fed members joined in the chorus of comfort. Separately, Chicago Fed President Charles Evans and Boston Fed chief Eric Rosengren emphasized that achieving the Fed's goal of sustained 2% inflation will be difficult and require rates to stay low for a long time.

The Dow and S&P 500 both jumped to new intraday record highs on the reassurance that easy money will continue to flow, then retreated to modest gains as investors tracked back toward safe-haven assets.

ADP reported private payrolls added 742,000 jobs in April, the most in seven months, but fell short of forecasts projecting 800,000. Meanwhile, the ISM services survey slipped to 62.7% in April after reaching a record 63.7% in March.

Treasurys rallied mildly behind the data and Fed reassurances, pressuring yields. Lower yields, in turn, support gold by reducing the opportunity cost for holding it instead of bonds as a safe-haven asset. The dollar was virtually flat.

The other precious metals were lower, with silver dipping 0.1% while platinum and palladium bot slipped 0.2%.

At the Comex close: June gold gained $8.30 to $1,784.30; July silver slipped 4 cents to $26.52; July platinum dropped $3 to $1,228.80; and June palladium shed $4.80 to $2,972.80 an ounce.


5/4/2021: Gold slips on Yellen, dollar

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slipped 0.9% to close at $1,766 after comments from Janet Yellen about higher interest rates triggered a rise in the dollar and undercut demand for alternative stores of value.

Treasury Secretary Yellen told the Atlantic in an interview aired today that interest rates might have to rise "somewhat" to prevent the economy from overheating. The remark was made within the context of rapidly escalating stock prices and was softened with reassurances that inflation will not become a problem.

Even though Yellen has no say in setting monetary policy, the markets responded sharply to the suggestion that tightening may be coming sooner than the Fed has let on. The Nasdaq tumble nearly 2% as investors rotated out of high-flying tech stocks in favor of defensive shares like healthcare and consumer staples. The S&P 500 lost 0.7% while the Dow was nearly flat.

The dollar rallied 0.4% to a two-week high against major rivals, fueled by risk-off sentiment and the hint of higher rates. A stronger dollar pressures gold and other commodities by making them more expensive in other currencies, undercutting overseas demand.

The other precious metals were mostly lower, with silver and palladium losing 1.5% and ol1%, respectively, while platinum added 0.1%.

At the Comex close: June gold dropped $15.80 to $1,776; July silver lost 40 cents to $26.56; July platinum picked up $1.70 to $1,231.80; and June palladium dipped $3.80 to $2,977,60 an ounce.

  

Metal Ask      Change
Gold $1,871.68           Price Change Up Arrow $1.99
Silver $28.62           Price Change Up Arrow $0.30
Platinum $1,244.33           Price Change Down Arrow $-3.66
Palladium $2,955.65           Price Change Up Arrow $22.29
In US Dollars

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