Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 1% to close at $2,026 after hawkish talk from Fed and ECB officials dimmed the outlook for interest rate cuts, lifting yields and the dollar while weighing on alternative stores of value.

Fed Governor Christopher Waller said today that rate reductions are likely this year, but the Fed will not be “rushed.” In previous cycles, the Fed typically reversed course dramatically, but this time, Waller said, there’s “no reason to move as quickly or cut as deeply.”

With markets pricing-in seven quarter-point reductions this year, several Fed officials have spoken out recently to cool the rate-cut fever. Perhaps finally getting the message, Fed fund futures traders reduced the odds of a March rate cut to 67%, down from 81% yesterday.

Waller’s hawkish talk was echoed by two European counterparts at Davos. French central bank chief François Villeroy de Galhau and fellow ECB member Robert Holzmann said separately the ECB “should be patient” and lingering inflation might prevent rate cuts this year.

European and US yields rose on the shifting rate view, with 10-year Treasury yields climbing back above 4%. Benchmark sovereign bond yields tend to move in sympathy, especially when rate policies align. Rising yields weigh on gold by increasing the opportunity cost for holding it instead of bonds for safety.

Tracking with yields, the dollar rallied 1% against major rivals, pressuring gold and other commodities priced in it for global trade by making them more expensive in other currencies.

Gold’s slide was backstopped by weak US economic data. The Empire State manufacturing gauge plummeted nearly 30 points to negative 43.7 in January, where anything under 50 signifies contraction. It was the lowest reading since the depth of the pandemic in May 2020 and the second-lowest reading ever.

The other precious metals were also sharply lower, with silver sliding 1% while platinum and palladium fell 1.8% and 4.1%, respectively.

At the New York spot close: gold lost $20.70 to $2,026; silver shed 23 cents to $22.93; platinum dropped $16.70 to $904.40; and palladium dumped $40.40 to $938.10 an ounce.