AGE Daily Gold Update

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

7/5/2024: Gold jumps on shifting rate view

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold jumped 1.2% to close at a fresh one-month high above $2,388 after downbeat employment data stoked expectations for rate cuts from the Fed, pressuring Treasury yields and the dollar. The metal rose 2.6% for the week. Silver surged 2.7% to $31.30, notching a weekly increase of 7.4%.

The US economy added 206,000 new jobs in June, slightly more than most forecasts. But beneath the reasonable headline number, the details of the government's nonfarm payrolls report showed significant weakening in the labor market.

Most of the hiring was for government rather than private sector jobs. Totals for April and May were revised sharply lower, with 110,000 fewer positions created than initially reported. The unemployment rate rose to a 30-month high of 4.1%. And wages grew at the slowest pace in three years.

Combined with recent data showing cooler consumer and wholesale inflation, along with weaker PMI readings in both the services and manufacturing sectors, the soft employment data increases the likelihood that the Fed will have to act soon to prevent a sharp downturn in the economy.

Fed fund futures traders now put the odds of a rate cut in September at 78%, up from around 64% a week ago, according to CME FedWatch. The odds of a second cut in December rose to 74% from 64% a week ago.

Benchmark 10-year Treasury yields retreated under 4.3% on the shifting rate view, supporting gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking lower with yields, the dollar slipped nearly 0.3% against major rivals, resulting in a weekly decline of nearly 1%. A weaker buck boosts gold and other commodities by them the less expensive overseas.

Rising oil prices also lifted gold this week. US benchmark WTI crude added 0.4% today and 3% this week for its fourth straight weekly win. Expectations for strong summer demand and a Q3 supply deficit are fueling the increase. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Platinum rose 3.8% today and this week. Palladium added 0.4% for a weekly rise of 6.3%.

At the New York spot close: gold jumped $28.70 to $2,388.50; silver surged 84 cents to $31.39; platinum picked up $38.30 to $1,040.80; and palladium rose $4.30 to $1,039.60 an ounce.

7/3/2024: Gold surges to 1-month high

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold surged 1.6% to a one-month high near $2,360 as soft employment and ISM data lifted expectations of a Fed rate cut in September, pressuring Treasury yields and the dollar. Silver jumped 4.1% to finish at $30.55 an ounce.

First-time jobless claims rose 4,000 to 238,000 last week, hovering near a one-year high, while the total number of people on unemployment rose to the highest level in 30 months. Considered a proxy for layoffs, jobless claims are a weathervane for the strength of the economy.

In another sign of a cooling labor market, ADP reported private payrolls added just 150,000 new jobs last month, the smallest increase in five months. Friday's release of the government's nonfarm payrolls report should add further clarity on job growth.

The Institute of Supply Management said the US services index sank to a four-year low of 48.8% in June as new orders and employment both fell sharply. It was the biggest contraction since the pandemic. Roughly 70% of Americans are employed in service businesses.

The ISM manufacturing survey was also negative in June, marking three straight months of contraction.

Benchmark 10-year Treasury yields retreated on the downbeat data as traders increased their bets that the Fed will cut rates in September. Fed funds future trading puts the odds at 68% for a quarter-point decrease with a second coming in December. Falling yields lift gold by decreasing the opportunity cost for holding it instead of bonds.

Tracking lower with yields, the dollar lost 0.5% against major rivals, boosting gold and other commodities by making them less expensive in other currencies.

Platinum dipped 0.2% while palladium rose 1.4%.

At the New York spot close: gold surged $36.80 to $2,359.80; silver jumped $1.20 to $30.55; platinum dipped $1.60 to $1.002; and palladium added $14, to $1,035.30 an ounce.

7/2/2024: Gold dips on elevated yields

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold dipped 0.2% to $2,323 despite a downtick in the dollar and mildly dovish comments from Fed Chair Jerome Powell as Treasury yields remain elevated and traders await new data on unemployment. Silver added 0.2% to finish at $$29.35 an ounce.

Speak at an ECB forum in Portugal, Powell said the US economy is back on its "deflationary path" after inflation rebounded slightly during the first quarter of the year. However, he added that more data is needed to get "a true reading" of what is happening with underlying inflation.

Powell also acknowledged the risks of holding rates too high for too long, a theme that Chicago Fed President Austen Goolsby emphasized separately in comments to CNBC today. Citing "warning signs" in the economy, Goolsby said that real interest rates, adjusted for inflation, are already the highest in many decades, tightening monetary policy by more than the Fed intends.

This Friday's release of the government's nonfarm payrolls report for June should provide additional data on the direction of the economy and therefore the Fed funds rate.

The dollar slipped 0.2% against major rivals on the semi-dovish Fed talk, limiting gold's slide by making it cheaper overseas.

Benchmark 10-year Treasury yields also eroded slightly but hovered near a one-month high on Monday. High yields weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Platinum rose 2.6% while palladium jumped 4.9% on improving prospects for hybrid autos, which use the metal in catalytic converters.

At the New York spot close, gold dipped $4.60 to $2,323; silver added a nickel, to $29.35; platinum picked up $25.30 to $1,003.60; and palladium surged $47.80 to $1.021.60 an ounce.

7/1/2024: Gold steady despite higher yields

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold was nearly flat, dipping 10 cents to close at $2,327.60, as pressure from rising Treasury yields was offset by support from sharply higher oil prices and soft US data. Silver added 0.2% to finish at $20.30 an ounce.

The ISM reported US manufacturing slumped for a third straight month with the purchasing managers index dropping to 48.5% in June, where anything under 50% signals contraction. Weakness was across the board, with the only upside being a drop in prices paid by factories, suggesting less inflation in the pipeline.

Construction spending dropped more than expected in May as businesses and government cut back on projects due to ultra-high interest rates.

Softer US data helps gold by increasing the case for rate cuts from the Fed. Traders in Fed fund futures place the odds of a quarter-point September cut at 65%. With a second reduction in December.

This Friday's release of the government's nonfarm payrolls report should provide further clues on the likely course of monetary policy.

Benchmark 10-year Treasury yields climbed to nearly 4.5% as investors weighed the consequences of a potential Trump presidency in the wake of Biden's poor debate performance last week. Trump's call for 10% tariffs on all imports and 60% on China is widely seen as highly inflationary.

Higher yields weigh on gold by increasing the opportunity cost for holding it instead of bonds.

Supporting gold, US benchmark WTI crude jumped 2.3% to a two-month high above $83 per barrel on stronger-than-expected summer demand from vacation drivers, airlines, and trucking. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Platinum and palladium fell 2.4% and 0.4%, respectively.

At the New York spot close: gold dipped a dime to $2,327.60; silver added 6 cents, to $29.30; platinum shed $23.60 to $978.30; and palladium slid $4.40 to $973.50 an ounce.

6/28/2024: Gold steady after PCE, other metals gain

Source: Dana Samuelson, American Gold Exchange

Austin — New York gold was little changed today, gaining 0.16%, and trading in a tight $15 range following the release of the highly anticipated PCE inflation data, the Fed’s preferred measure of inflation. Both core and headline inflation eased slightly from last month and in line with analysts’ expectations. Core inflation (excluding food and energy) dipped from 2.8% YoY to 2.6%, while headline PCE eased from 2.7% to 2.6%. The dollar and treasury yields were mixed with the dollar easing 0.07% and 10-year T-bill yields gaining 0.06 basis points.

With inflation slowly easing and bond yields trailing inflation lower, traders are increasingly gaming the Fed may still cut interest rates this year. According to the CME FedWatch tool, the chances of September interest rate cut increased from 64% to 68% following the PCE release this morning.

Silver gained 1% from yesterday’s New York close; platinum gained 1%, and palladium surged 5.4%.

At the New York spot close: gold gained $3.20 to $2,327.70; silver gained 31 cents, to $29.23; platinum rose $10.20 to $1,001.90; and palladium surged $50.40 to $977.90 an ounce.

6/27/2024: Gold rebounds on softer economic data

Source: Dana Samuelson, American Gold Exchange

Austin — New York gold rebounded 1.01% to $2,324.24 from yesterday’s dip to just under $2,300 following the third and final revision of Q1 GDP. While Q1 GPD increased 0.1% from 1.3% to 1.4%, personal consumption expenditures and services declined from the second estimate, indicating modestly lower consumer resilience in the US in Q1. Consumer spending comprises about 70% of the US economy.

Increases in government spending and exports from the second estimate helped to offset declines in personal consumption expenditures and business equipment spending to result in a net gain of 0.1% for the final Q1 GDP.

In a separate report, new orders for non-defense capital goods orders fell sharply, 0.6%, in May. Softer demand for goods and higher borrowing costs were cited as the reason for the unexpected MoM slowdown in business equipment spending from April’s 0.3% gain. A slowdown in new orders suggests the US economy is losing momentum.

The dollar and treasury yields edged lower following the revised GDP release and the new orders report, helping to buoy gold and silver.

Tonight, we will get our first look at the upcoming presidential election rematch between President Biden and ex-President Trump as they take the stage in Atlanta for the first of only two scheduled presidential debates this year. Tomorrow morning the BEA will release the latest PCE inflation data which is crucial to the Fed’s interest rate policy decision making. Analysts are anticipating a slight decline in PCE inflation from 2.7% last month to 2.6% for this month’s release.

Surprises in either tonight’s debate or tomorrows PCE report could result in market volatility tomorrow, which has been absent from most major markets for the last several trading sessions.

Silver was virtually unchanged from yesterday’s New York close; platinum fell 3.1% while palladium rose 1.4%.

At the New York spot close: gold gained $24.76 to $2,323.96; silver gained 1 cent, to $28.91; platinum fell $31.70 to $991.70; and palladium lost $13 to $938.13 an ounce.

6/26/2024: Gold retreats as dollar surges

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold fell 0.8% to close under $2,300 as the dollar surged and Treasury yields edged higher rose ahead of tomorrow's crucial PCE inflation data. Silver added 0.2% to $28.90 an ounce.

The dollar surged 0.4% to an eight-week high against a basket of major competitors while reaching the highest level against the yen since December 1986. The Fed's so-slow policy on rate cuts relative to the ECB is boosting the buck, while the Bank of Japan's ultra-low interest rate policy is weighing heavily on the yen in Forex trade.

Meanwhile, benchmark 10-year Treasury yields pushed up to 4.3% as traders positioned themselves ahead of the personal consumption expenditures data due tomorrow. The Fed's preferred inflation gauge, the PCE print could determine whether the Fed is on track for a rate cut in September.

A rising dollar pressures gold and other commodities by making them more expensive in other currencies, limiting overseas demand. Higher yields further weigh on the metal by increasing the opportunity cost for holding it instead of bonds as a safe0haven asset.

Platinum rose 3.8% while palladium fell 1.2%.

At the New York spot close: gold shed $17.40 to $2,299.20; silver added 6 cents, to $28.90; platinum picked up $37 to $1,023.40; and palladium lost $11 to $925.20 an ounce.

6/25/2024: Gold slips on data, dollar

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold slipped 0,6% to close under $2,317 as Treasury yields and the dollar rose on upbeat US data and hawkish Fed speak, undercutting alternative store of value. Retreating oil prices also weighed on the metal. Silver fell 2.2% to finish at $28.84 an ounce.

US home prices resumed their climb in April, adding 0.2% after holding flat in March. While the annualized increase slowed from 6.7% to 6.3%, reflecting 7% mortgage rates, prices nonetheless set a record across Case-Shiller's 20-city index.

Consumer confidence dipped in June on anxiety about prospects for the economy. But the Conference Board's index beat forecasts, suggesting more resilience than expected in the engine of US economic growth. Consumer spending accounts for roughly 70% of GDP.

Fed Governor Michelle Bowman repeated her position that interest must remain high "for some time" and could go even higher to prevent a resurgence in inflation. Coming one day after regional Fed Presidents Austin Goolsby and Mary Daley signaled their openness to rate cuts, Bowman's comments pushed the Fed-speak pendulum back in a hawkish direction.

Benchmark 10-year Treasury yields rose slightly on the upbeat data and shifting rate view, pressuring gold by increasing the opportunity costs for holding the non-yielding asset instead of bonds.

Tracking with yields, the dollar added 0.2% against major rivals. A rising buck weighs on gold and other commodities by making them pricier overseas.

US benchmark WTI crude slipped 0.4% to under $81 as tensions eased following last week's drone attacks on Russian refineries. Gold often trades in sympathy with oil as a hedge against energy inflation.

Gold remains supported by strong retail and central bank buying in Asia, along with expectations of rate cuts among major economies. This Friday's release of the personal consumption expenditures index, the Fed's preferred inflation gauge, should provide further clues to US policy in coming months.

Platinum and palladium lost 1.5% and 3.1%, respectively.

At the New York spot close: gold slipped $13.40 to $2,316.60; silver fell 65 cents to $28.84; platinum shed $15.40 to $986.40; and palladium lost $38.40 to $945.70 an ounce.

6/24/2024: Gold gains on dollar, Fed speak

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold gained 0.6% to close at $2,330 as yields and the dollar pulled back on dovish Fed commentary about interest rates, lifting alternative stores of value ahead of this week's crucial PCE release. Silver slipped 0.3% to finish under $29.50 an ounce.

A pair of Fed officials made a case for lowering interest rates this fall. On CNBC, Chicago Fed President Austin Goolsby identified three key stresses on the US economy: rising jobless claims, cooling consumer spending, and a sharp increase in consumer delinquencies of credit cards. Together, he suggested, they signal that interest rates may be too restrictive.

Separately, San Francisco Fed President Mary Daly, echoed concerns about the ongoing impact of the highest rates in a generation. With unemployment an increasing risk, the Fed needs to "exhibit care" in monetary policy to prevent "a painful disruption to the economy" from overtightening, she said at a conference.

This Friday's release of the Fed's favorite inflation gauge, the personal consumer expenditures (PCE) index, should provide additional clues about the course of interest rates. If it follows the recent CPI and PPI data showing lower inflation pressure, the odds of rate reductions will likely increase.

Fed fund futures are currently pricing in a quarter-point rate cut at around 66%.

Benchmark 10-year Treasury yields edged slightly lower, buoying gold by decreasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar shed 0.2%, retreating from an eight-week high, as traders prepare for the PCE release and the possible currency intervention by the Bank of Japan to lift the yen. Japan's currency is nearing a 34-year low against the dollar, a level that triggered 9.8 million yen in support by the BOJ last April.

Rallying oil also supported gold. US benchmark WTI crude added another 1.2%, driven by expectations of strong driving demand this summer and supply concerns because of conflicts in the Middle East and Ukraine. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Platinum and palladium rose 0.6% and 6.5%, respectively.\At the New York spot gold close: gold gained $13.60 to $2,330; silver slipped 8 cents to $29.49; platinum picked up 5.5% to $1,001.80; and palladium surged $58 to $976.10 an ounce.

6/21/2024: Gold slides after strong PMI data

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold slid 1.6% to close below $2,317 as positive PMI data lifted Treasury yields and the dollar, undercutting alternative stores of value. The metal dipped 0.6% for the week. Silver fell 3.8% to $29.57 but still managed a weekly rise of 0.6%.

The S&P flash index of service-sector purchasing managers rose in June to a 26-month high of 55.1, while the flash manufacturing PMI climbed to a three-month high of 51.7. Any reading above 50 indicates expansion. New orders rose slightly, and employment increased for the first time in three months. Nearly 70% of Americans are employed in service industries.

Perhaps more important to the Fed as it charts the course of monetary policy, the rate at which companies raise their prices declined to the lowest level in four years.

After a succession of weak economic data in recent weeks, the pair of influential PMI reports showed welcome resilience in the US economy in June without causing concern about rekindled inflation.

Separately, the index of leading US economic indicators fell another 0.5% in May, but does not signal recession, according to the Conference Board.

Benchmark 10-year Treasury yields recovered from early-session losses on the upbeat PMI data, pressuring gold by increasing the opportunity cost for holding it instead of bonds for safety.

The dollar gained 0.2% against major rivals while hitting an eight-week high against the yen on expectations that US rate cuts will lag its peers. A stronger buck weighs on gold and other commodities by making them pricier overseas.

After hitting new all-time highs above $2,400 in May, gold has stalled in June as the Fed, responding to higher inflation during Q1, became more cautious about reversing interest rates. But bullish momentum is widely expected to resume in the second half of the year on safe-haven demand, aggressive buying by central banks, and lower interest rates in major economies.

In a note to clients yesterday, JP Morgan Chase forecasts an 8% to 10% rise in the gold price during the Q3 and Q4, with a targeted high of $2,600 an ounce in 2025. Silver is projected at $34 an ounce next year.

Platinum rose 1.2% for a weekly increase of 3.9%. Palladium advanced 1.4% today and 2.2% this week.

At the New York spot close: gold slid $37.40 to $2,316.40; silver dropped $1.20 to $29.57; platinum added, $12.10, to $996.40; and palladium picked up $12.70 to $918.10 an ounce.