Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.1% to close above $1,782 as worries about global growth and an overly aggressive Fed pressured yields and the dollar, lifting alternative stores of value.

Following upbeat data about the job market and the US services sector over the past two sessions, the markets have paradoxically become more pessimistic about US economic prospects. Strong data mean bigger rate hikes, the thinking goes, and higher interest rates increase the likelihood of recession.

All three major US stock indexes retreated on the rate and growth concerns. The Dow lost 1% and the S&P 500 1.5%. The tech-heavy Nasdaq, more sensitive to interest rates, dumped 2%.

Benchmark 10-year Treasury yields fell back to just above 3.5% and 30-year yields dropped to the lowest point since September as traders shifted toward the perceived safety of government bonds. Falling yields are good for gold because they decrease the opportunity cost for holding it instead of bonds as a safe-haven asset.

Meanwhile, the bond market continues to flash its most dependable recession warning. The spread between 2-year and 10-year Treasury yields shrank past minus 80 basis points, the most inverted level since October 1981, and has remained inverted for 102 trading days, one of the longest streaks since 1977.

The yield curve inverts when investors believe the economy will become significantly worse in the short term and shift their money into long-term bonds despite the risks inherent in tying up money for a long period. It usually presages a recession.

The dollar also edged lower, tracking yields. A weaker dollar supports gold by making it cheaper in other currencies.

Capping gold's rise, oil prices plunged on global demand worries after China's services sector dropped to a six-month low. Global benchmark Brent crude lost 4% to fall below $80 per barrel for the first time in 2022. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were lower, with silver dipping 0.5% while platinum and palladium slid 1.2% and 0.5% respectively.

At the Comex close: February gold picked up $1.10 to $1,782.40; March silver slipped 8 cents to $22.34; January platinum lost $12.10 to $995.40; and March palladium dropped $9.80 to $1,851.50 an ounce.