Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold fell 2.1% to hold above $1,970 as a rally in stocks prompted traders to take profits from the two-day, 5% rally that propelled it back above $2,000. The metal then slid below $1,950 after hours when the minutes from the Fed's July meeting lifted the dollar.

Defying gravity, the S&P 500 and Nasdaq rose to new all-time highs early in the session, erasing all the losses caused by the coronavirus pandemic earlier this year. Apple became the first US company with $2 trillion in capitalization, helping to lift both indexes.

The record-breaking performance is increasingly disconnected from the reality of an economy still devastated by business closures and layoffs. Analysts point to the extraordinary easing from the Fed and stimulus spending by the government as primary causes for stock market exuberance. With cheap cash flooding the financial system and little yield to be had from most securities, investors have few options but to ride the momentum.

All three indexes retreated into losses late in the day, however, after the minutes from the FOMC's July meeting showed Fed staff lowering the forecast for economic growth in Q3 and Q4. COVID resurgence since mid-June has reversed the recovery trend that began with societal reopening in May.

The Fed's downgraded outlook triggered a sharp rebound in the dollar, lifting the ICE Dollar Index 0.7% higher as Forex traders shifted toward the perceived safety of the US currency. A rising dollar weighs on gold and other commodities by making them more expensive in other currencies.

Also creating a headwind for gold, the central bankers showed little interest in enacting yield curve controls, which would effectively cap Treasury yields at predetermined levels as an additional form of easing. With real rates already negative, capped yields would be bullish for gold by further constraining the opportunity cost of holding the metal, which provides no yield itself.

The other precious metals were also lower, with silver dropping 2.6% while platinum and palladium shed 2% and 2.2%, respectively.

At the Comex close: December gold fell $42.80 to $1,970.30; September silver lost 74 cents to $27.34; October platinum dropped $19.10 to $956.30; September palladium receded by $49.20 to $2,179.10 an ounce.