Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.4% to close under $1,790 as the dollar and equities strengthened ahead of tomorrow's Fed decision, undercutting alternative assets.

The Federal Reserve's two-day meeting on monetary policy began today, with virtually all market observers expecting the central bankers to announce that it will taper the bond-buying program known as quantitative easing.

Since the start of the pandemic, QE has flooded $120 billion per month into the economy to stoke spending and lending. At its last meeting the Fed floated the idea of reducing stimulus by some $15 billion per month and ending it altogether by next summer.

The unwelcome consequence of all this monetary easing has been sharply higher inflation. The Fed typically combats inflation by raising interest rates, something it cannot do until the taper is finished.

A concern is that the Fed's decision to taper easing could slow the nascent recovery. Benchmark 10-year Treasury yields pulled back sightly on concerns that the central bank may be too aggressive in the removal of stimulus and undermine growth. Falling yields typically support gold by reducing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar rose 0.2% on the prospect of higher rates down the road. Rate hikes would strengthen the buck by making it more attractive to currency traders seeking higher yield. A stronger dollar, in turn, pressures gold by making it more expensive overseas.

Also weighing on the metal, all three major US stock indexes rose behind solid earnings reports, with the Dow on track to eclipse 36,000 for the first time ever.

The other precious metals were also lower, with silver falling 2.4% while platinum and palladium dropped 2.6% and 2.2%, respectively.

At the Comex close: December gold slipped $6.40 to $1,789.40; December silver lost 57 cents to $23.51; January platinum dropped $28 to $1,039.30; and December palladium shed $44.90 to $2,007.40 an ounce.