AGE Daily Gold Update

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

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.