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


8/22/2019: Gold falls following release of Fed minutes

Source: Dana Samuelson, American Gold Exchange

Austin — Gold fell 0.5% today following the release of yesterday's Fed minutes that implied the Fed was modestly less dovish than markets previously anticipated. Yields for the 2-year, 10-year and 30-year U.S. Treasury notes rose 2.3%, 1.5% and 1.3% respectively, helping to push gold slightly lower as traders continued to digest the information contained in yesterday's July Fed minutes release.

Tumbling bond yields world-wide have been the primary driver of gold's strong break out rally from $1,330 in early June to as high as $1,531 last week. When yields fall, the real rate of return (yield minus inflation) falls making gold more attractive to hold because gold does not produce a yield. In this environment gold is seen as an attractive preservation of wealth vehicle and, of course, as the ultimate currency of last resort.

With Fed members indicating a lower desire to reduce interest rates both during their July meeting and in the coming months than many traders expected, safe-haven bonds sold off slightly and yields rose, rebounding off lows set last week. Bond yields have fallen relentlessly since early May in a massive international flight to safety, first into bonds and then into gold. Yesterday's Fed minutes may have finally given the bond markets justification to stem this relentless yield decline in the short-term.

In other news the Congressional Budget Office estimated that the Federal budget deficit will be $960 billion in 2019 and will average $1.2 trillion per year between 2020 and 2029. The CBO also estimated economic output is expected to grow by 2.3% this year but will decline to 1.8% per, on average, through 2023.

At the Comex close: December gold fell $7.20 to $1,508.50; September silver fell $0.11 to $17.04; October platinum added $3.80 to $861.90; and September palladium gained $19.70 to 1485.20 an ounce.


8/21/2019: Gold unchanged from yesterday's close

Source: Dana Samuelson, American Gold Exchange

Austin — Gold closed the New York session unchanged from yesterday's close after trading in a tight $11 range in the overnight session. Following the release of the Fed July meeting minutes, gold edged slightly lower in electronic trading.

Fed minutes revealed that Fed members were reluctant to taking a predetermined course on future interest rate policy decisions and instead we taking a meeting-by-meeting approach going forward. In a split decision two Fed officials voted for a half-point rate cut while "several" were initially in favor of no rate cut at all. The final vote was 8 to 2 in favor of a 0.25% rate cut. Fed minutes reiterated Chairman Powell's post meeting press conference comments that the July rate cut was indeed a "mid-cycle adjustment".

The minutes shed further light into where the Fed stands in the current economic environment. Citing the need for flexibility due to the unknown outcome of some of the risks facing the economy, and the absence of clarity regarding when those risks may be resolved, Fed members opted to take a wait and see approach. Minutes justified the July 0.25% rate cut as more of a risk-management decision than as an economic stimulus decision, with uncertainty due to trade tariffs being their primary concern.

Committee members continued to view a sustained expansion of economic activity, strong labor market conditions, and inflation remaining near their 2% objective as likely outcomes going forward. Several participants were concerned that the inversion of the 10-year and 3-month yield curve, which had persisted for over two months, could foreshadow weaker economic activity in the future potentially requiring the Fed to reduce interest rates further. Members agreed that it was important to maintain optionality in setting the future target rate for the Federal funds rate.

At the Comex close: December gold remained unchanged at $1,515.70; September silver edged up $0.02 to $17.15; October platinum gained $5.30 to $858.10; and September palladium fell $24.20 to 1465.50 an ounce.


8/20/2019: Gold stubbornly holds above $1,500 per ounce

Source: Dana Samuelson, American Gold Exchange

Austin — Gold edged 0.3% higher in relatively quiet trading while treasury yields world-wide, conversely, weakened modestly. Gold continues to stubbornly hold above $1,500 per ounce, despite a strong U.S. dollar.

Gold normally trades inversely to the dollar but, as yields have fallen, gold has risen in value due to concerns over a weakening global economy that the U.S. has so far remained resistant to. That sentiment is shifting, however, following the inversion of the yield curve in the U.S. last week and yesterday’s report out of Germany that economic output will remain "lackluster" in the third quarter and "could continue to fall slightly". Germany, Europe's largest economy, contracted 0.1% in the second quarter, prompting the ECB to consider extra monetary stimulus.

Market focus tomorrow will be on the release of the Fed minutes following their July meeting when the Fed dropped interest rates 25 basis points. Traders will be looking for clues and insight into possible Fed actions going forward.

At the Comex close: December gold gained $4.10 to $1,515.70; September silver surged $0.20 to $17.13; October platinum fell $6.50 to $850.30; and September palladium gained $10.10 to $1484.40 an ounce.


8/19/2019: Gold consolidates for a second day

Source: Matt Warden, American Gold Exchange

Austin — Gold took advantage of a slow news day Monday to shed 0.8%, closing at $1,511.60, consolidating for a second straight trading session after having gained as much as 9% since the start of August. Investors are awaiting release of the Federal Reserve's July FOMC minutes scheduled for Wednesday, Chairman Powell’s speech at the annual Jackson Hole symposium planned for Friday, and news from a potentially contentious G7 summit being held over the weekend.

Focus will turn to July's FOMC minutes Wednesday, with investors eager for more information behind the Federal Reserve decision to cut overnight lending rates by 25 basis points. In an unusual move, two regional Fed presidents dissented the decision to cut rates, preferring to maintain the previous higher target range for the federal funds rate. In a news conference following the FOMC announcement, Powell indicated the rate cut was not the "beginning of a lengthy cutting cycle" but rather a "mid-cycle adjustment to policy". As a result, some analysts have called July's cut a "hawkish" rate cut.

Attention will return to Federal Reserve Chairman Powell on Friday, when he is scheduled to speak at the annual Jackson Hole symposium, where investors will be listening for hints about future U.S. monetary policy. Since the "hawkish" July rate cut announcement, global economic uncertainty has increased markedly: U.S.-China trade tensions have ramped up following a surprise August 1st announcement of additional tariffs on all remaining Chinese goods by the Trump administration, eurozone economic growth data has slipped further into contraction, a hard-Brexit has become more likely with Boris Johnson assuming the position of Prime Minister, and President Trump has openly called for at least a 100 basis point cut to the fed rate and "some quantitative easing as well" via Twitter.

This weekend's G7 summit will be marked by discussions on the U.S. China trade war, protests in Hong Kong, a European-backed Iranian nuclear deal, the first appearance of Boris Johnson on the world state as head of the UK government, the Brexit impasse, Russian election meddling and North Korea, among other topics, all areas of contention among the seven attendant nations.

The other precious metals ended the rather lowkey day mixed, with silver down 1.1%, while platinum rallied 0.6% and palladium surged 2.2% higher.

At the Comex close: December gold ended the day down $12.00 to $1,511.60 per ounce; September silver dropped 18 cents to $16.94 per ounce; October platinum gained $5.30 to $856.80 per ounce; September palladium rose $33.00 to $1,474.30 per ounce.


8/16/2019: Gold regroups after strong week, month

Source: Matt Warden, American Gold Exchange

Austin — Gold closed down 0.5% to end the day at $1,523.60 but ended the week up more than 1%. Although gold spiked to over $1,546 per ounce on Tuesday, a more than 6-year high, it spent much of the week in a $1,500 to $1,520 trading range, consolidating month-to-date gains of more than 8%. Growing expectations of continued aggressive stimulus from all the major central banks gave global financial markets a welcomed respite after a tumultuous week, temporarily easing demand for haven assets like gold.

Focus will turn to the Federal Reserve's annual Jackson Hole symposium next week for guidance on future U.S. monetary policy. According to the CME Group's FedWatch, there is now a more than 30% chance of 50 basis-point cut in the Effective Federal Funds rate at their September FOMC meeting.

A top official at the European Central Bank stated today they will announce a "substantial and significant" stimulus package in September, responding to weakening eurozone growth with additional bond purchases as well as a 0.1% cut to its key interest rate, currently standing at 0.4%.

China's state planner also announced today that it would be rolling out a plan to boost disposable income this year and in 2020 in order to spur economic growth by encouraging consumer demand but did not provide further details.

Global central banks are not increasing stimulus alone; according to The New York Times, more than 30 central banks around the world have cut interest rates this year, including Australia, China, South Korea, Russia, Japan, Turkey, India, Brazil, Thailand, and New Zealand, among others, with expectations of more aggressive easing ahead. Coordinated global easing is normally reserved for recessionary periods, yet the global growth forecast for economic expansion is 3.2% in 2019 and 3.5% in 2020, according to the IMFs latest projections.

The other precious metals were mixed for the day, with silver down 0.5%, commensurate with gold, and platinum and palladium 1.1% and 0.2% higher, respectively.

At the Comex close: December gold ended the day $7.60 lower at $1,523.60 per ounce; September silver dropped 9 cents to $17.12 per ounce; October platinum rallied $9.50 to $851.50 per ounce; September palladium rose $2.70 to $1,441.30 per ounce.


8/15/2019: Gold holds firm after mixed U.S. economic data

Source: Matt Warden, American Gold Exchange

Austin — Mixed U.S. economic data, lingering uncertainty surrounding U.S. - China trade negotiations, and fresh lows in U.S. Treasury note yields led to a choppy day in the gold market, finishing the day 0.2% higher to close at $1531.20.

Strong July U.S. retail sales data was offset by a weak industrial production report, sending mixed signals about the health of the U.S. economy. July retail sales increased 0.7% with strong sales online and at retail stores, while industrial production decreased 0.2% with broad bases declines in durable and non-durable goods. With manufacturing output declining for the past two quarters and now in a technical recession, U.S. economic growth remains squarely on the shoulders of the U.S. consumer.

In a short statement overnight, China's State Council Tariff Committee said the new 10% tariffs announced in early August, originally set to take effect on September 1 but now partially delayed until December 15, have taken the U.S. and China off the track of resolving their dispute through negotiations and noted that China “has no choice but to take necessary measures to retaliate”, without specifying what measures would be taken. Uncertainty surrounding the U.S. – China trade dispute have increased investor demand for safe-haven assets like gold.

10-year U.S. Treasury note yields neared all-time lows today, falling to 1.477% in afternoon trade. 30-year U.S. Treasury note yields plunged to new all-time lows as well, dropping below 2% for the first time ever, to as low as 1.926%. Lower U.S. Treasury note yields buoy demand for gold because the opportunity cost of owning gold is lessened.

The other precious metals were mixed for the day, with silver and platinum down by 0.4% and 0.9%, respectively, while palladium added 1.6%.

At the Comex close: December gold ended the day up $3.40, closing at $1,531.20 per ounce; September silver dropped 7 cents to $17.21 per ounce; October platinum fell $6.00 to $842.00 per ounce; September palladium rallied $22.20 to $1,438.60 per ounce.


8/14/2019: Inverted yield curve propels gold to 6-year high

Source: Matt Warden, American Gold Exchange

Austin — Gold rallied 0.9% to close the day at a new 6-year high of $1,527.80 after the closely followed measure of the U.S. Treasury yield curve inverted — a classic recession indicator. The 30-year U.S. Treasury note yield hit a new low as evidence of a slowdown in global economic growth continued to mount.

The 3-month and 10-year U.S. Treasury note yield curves have been inverted since May of this year and reached the greatest inverted level since April 2007 this morning. Today the most significant measure of the yield curve — the difference between 2-year U.S. Treasury note and 10-year note yields — also inverted for the first time since May 2007. An inversion of 2-year and 10-year U.S. Treasury note yields have been a reliable indicator of impending recession, preceding each of the last seven recessions that have occurred in the past 50 years.

The yield on 30-year U.S. Treasury notes fell to a new record low today as well, moving as low as 2.016% and falling below the Federal Reserve's Effective Federal Funds (EFF) rate for the first time ever. The EFF rate is the interest rate banks charge each other for overnight loans to meet their reserve requirements. Unprecedentedly, it is now less expensive for banks to borrow money over a 30-year term than it is to borrow money overnight. The 10-year Treasury note yield also fell to a new 3-year low of 1.577%, honing-in on the all-time low of 1.44% set in 2016. As U.S. Treasury note yields decrease, demand for gold increases because the opportunity cost of owning gold, which provides no yield, is reduced.

Evidence of a global economic slowdown continues to mount with China reporting overnight factory output in June decelerated to a 17-year low and retail sales growth came in well below forecasts. Data out of Europe showed the eurozone economy slowed to a 0.2% growth rate in the second quarter, with Germany, the largest economy in the eurozone, reporting that their GDP contracted for the second time in four quarters, now on the verge of recession.

U.S. stock markets responded negatively to the day's news, with the Dow falling 3.05%, the S&P 500 down 2.93%, and the Nasdaq off 3.02%.

The other precious metals were mixed today: silver reigned, rallying an impressive 1.8%, while platinum and palladium were dragged lower by recession fears, falling 1.3% and 2.5%, respectively.

At the Comex close: December gold ended the day up $13.70, closing at $1,527.80 per ounce; September silver jumped 30 cents to $17.28 per ounce; October platinum fell $11.70 to $848.00 per ounce; September palladium dropped $35.10 to $1,416.40 per ounce.


8/13/2019: Gold reaches 6-year high overnight then pulls back

Source: Matt Warden, American Gold Exchange

Austin — Record low U.S. Treasury yields and escalating Hong Kong jitters helped boost gold to an early morning high of $1,546.10 per ounce, its highest price since April 2013, before it retreated lower to settle at $1,514.10 for the day following a Trump administration announcement that the U.S. would delay imposing 10% tariffs on some Chinese imports until after the Christmas shopping season.

Gold was buoyed overnight as 30-year Treasury note yields hit record low territory, falling to as low as 2.1%. 10-year Treasury note yields fell to a 3-year low of 1.62%, slightly higher than the all-time low of 1.44% set in 2016. Gold demand tends to increase as Treasury note yields decrease because the opportunity cost of holding gold instead of Treasury notes is reduced.

Hong Kong riot police clashed with protestors at the Hong Kong airport overnight, stoking fears that the confrontation was entering a new phase and raising concerns that greater intervention may follow by mainland China, adding risk to the outlook for world economic growth. In response, safe-haven demand for gold pushed the price to a 6-year high, but the price began to ebb after the protestors dispersed and the risk of further violence was avoided.

The morning sell-off from 6-year highs in gold accelerated after the U.S. Trade Representative's (USTR) office stated that it would exclude many consumer electronics, toys, footwear and clothing from additional 10% tariffs until December 15, marking an abrupt pull-back from the hardline stance announced only two weeks ago when President Trump said he would impose a 10% tariff on $300 billion of Chinese goods starting September 1. A spokesman for the USTR office also said trade negotiations would resume in two weeks. The de-escalation was received as a positive step by the marketplace, further reducing near-term demand for safe-haven assets like gold.

Except for palladium, the other precious metals followed gold lower, with silver and platinum both down 0.4%. Palladium tacked on an otherwise impressive 1.4%.

At the Comex close: December gold ended the day down $3.10, closing at $1,514.10; September silver dropped 8 cents to $16.98; October platinum fell $4.00 to $859.70; September palladium rose $20.70 to $1,451.50 an ounce.


8/12/2019: Gold edges higher, consolidation continues

Source: Matt Warden, American Gold Exchange

Austin — Gold has been consolidating since surging over $1,500 last week, ending the trading day 0.6% higher to close at $1,517.20, approaching on last week’s six-year high of $1,519.60. Gold is shining as a safe-haven amid growing global uncertainty over the U.S.-China trade war, slowing global and US economic growth, and mounting worries about China's response to ongoing Hong Kong demonstrations.

Demand for gold increased notably last week, according to U.S. Commodity Futures Trading Commission (CFTC) data published Friday, with hedge funds increasing their net-long gold position by 23%, the highest since July 2016. Additionally, holdings in global ETFs backed by gold are now at the highest since March 2013, with inflows for the month of July topping $2.6 billion, or 52 tons, an increase of 2%, according to the latest data from The World Gold Council.

Fears of slowing economic growth were noted over the weekend by Goldman Sachs, who warned the U.S.-China trade war is having a greater effect on the U.S. economy than expected and warned the risk of recession is rising. They now do not expect a trade deal before the 2020 presidential election and, if correct, predict a 0.6% drag on the US economy due to increased uncertainty and the expectation of 10% higher tariffs on an additional $300 billion in Chinese exports starting September 1.

Safe-haven demand was also buoyed by the escalating protest in Hong Kong. Chinese authorities condemned this weekend's ongoing Hong Kong protests as "the first signs of terrorism" and vowed a merciless crackdown on demonstrators. Protesters flooded the city's airport, forcing authorities to take the rare step of cancelling outgoing flights. In response to the unrest, the Chinese People's Armed Police have been assembling in a bordering Hong Kong city in advance of an apparent large-scale exercise, according to reporting from the Chinese-owned Global Times.

The other precious metals mostly outperformed gold today with silver and palladium both 0.8% higher, while platinum was essentially unchanged at 0.02% lower.

At the Comex close: December gold settled $8.70 higher at $1,517.20; September silver tacked on 14 cents to $17.07; October platinum slipped 20 cents to $863.70; and September palladium rose $11.50 to $1,430.80 an ounce.


8/9/2019: Gold has best week since June

Source: Bill Musgrave, American Gold Exchange

Austin — Gold was little changed, edging down $1 close at $1,508.50, as the market consolidated a strong week. Driven by escalating trade war tensions, dovish central banks, and slowing global growth, the metal added 3.5% for its biggest weekly rise since late June.

President Trump said today he is not ready to make a deal with China, and trade talks scheduled for September might be canceled. He also said the US would continue to refrain from dealing with Chinese telecom giant, Huwaii Technologies.

The comments punctuated a week during which the White House labeled China a currency manipulator for devaluing the yuan, which came after last week's threat to impose 10% tariffs on another $300 billion in Chinese goods.

Wall Street fell as investors braced for a new phase in the year-old conflict between the world's two largest economies. The S&P 500 slid 0.5% while the tech-heavy Nasdaq lost 0.8%.

The dollar slipped 0.1% against major rivals as investors continue to shift toward safe-haven currencies like the yen and Swiss franc. President Trump ramped up pressure on the Fed, demanding the central bank cut rates by a full point to help US exports. The buck closed the week 0.6% lower.

Central banks in India, New Zealand, and Thailand cut benchmark rates this week to stimulate their flagging economies, reflecting concerns that the increasingly bitter trade dispute between the US and China could push the global economy toward recession. New Zealand's half-point reduction to a record-low 1% was especially unexpected.

The other precious metals were mixed for the day but higher for the week. Silver inched down less than 0.1% today but rose 4.1% this week. Palladium slid 0.4% on the day but gained 1.5% on the week. Palladium added 0.4% for a weekly rise of 1.2%.

At the Comex close: December gold slipped $1 to $1,508.50; September silver dipped a penny to $16.93; October platinum lost $3.70 to $863.80; and September palladium rose $5.80 to $1419.30 an ounce.

  

Metal Ask      Change
Gold $1,528.87           $29.03
Silver $17.46           $0.37
Platinum $862.73           $0.58
Palladium $1,468.79           $-24.84
In US Dollars