Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold shed 1.9% to close under $2,016 on profit-taking after mixed US data and hawkish comments from a prominent Fed official lifted yields and the dollar, undercutting alternative assets. The metal ended the week down 0.5% after scoring its second-highest finish ever yesterday.

In the latest sign of a slowing economy, US retail sales dropped 1% in March for the fourth decline in five months. Sizable pullbacks were seen in almost all categories, although online sales bucked the trend, rising 1.9% as buyers sought bargains. Retail sales is a main component of consumer spending, which accounts for around 70% of GDP.

US manufacturing also declined in March, according to Fed data, after rising 0.6% in February. Weaker domestic demand is the main headwind facing the manufacturing sector.

On the positive side of the ledger, consumer sentiment improved slightly in April, rebounding from a four-month low in March, although Americans remain worried about inflation.

Mounting evidence of an economic slowdown has been shifting market expectation for interest rates in a dovish direction, pressuring yields and the dollar while lifting gold to weekly gains for the past six weeks.

Today, Fed Governor Christopher Waller threw shade on this dovish speculation. Declaring inflation "is still much too high," Waller said the Fed needs to keep raising interest rates "for a substantial period of time and longer than the market anticipates."

Following Waller's hawkish statements, the odds of a quarter-point hike in May jumped from 71% to 82%, according to Fed funds futures trading, and the odds of another hike in June rose from zero to nearly 20%.

Benchmark 10-year Treasury yields rose back above 3.5% on the shifting rate view, pressuring gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking higher with yields, the dollar rebounded from a one-year low to add 0.5% against major rivals. A stronger dollar is a headwind for gold and other commodities because it makes them pricier overseas.

The other precious metals were mixed for the day but higher for the week. Silver dropped 1.8% but still posted a weekly rise of 1.5%. Platinum dropped 1.1% today but gained 2.3% this week. Palladium added 0.1% today and 2.3% this week.

At the Comex close: June gold dropped $39.50 to $2,015.80; May silver slid 46 cents to $25.46; July platinum fell $11.50 to $1,054; and June palladium picked up 70 cents to $1,496.30 an ounce.