Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.3% to close under $1,844 as speculation about inflation and interest rates lifted yields and the dollar, pressuring alternative stores of value.

investors started the week focusing on the Consumer Price Index for May, which will be released this Friday. In March and April, annualized inflation gradually receded from 8.5%. to 8.3, according to the CPI. Most analysts had been forecasting the cooling trend to continue in May, to around 8.2%.

Following Friday’s stronger-than-forecast jobs report, however, that calculus has suddenly changed. The economy added 390,000 jobs in May, signaling unexpected momentum despite high inflation and the Ukraine war. That momentum may also bring higher-than-expected inflation for May.

Fed Chair Jerome Powell recently floated the idea of pausing rate hikes after two more of 50 basis points each. If inflation had finally peaked, the reasoning went, too much tightening would do more damage than good by snuffing out growth. Atlanta Fed President Rafael Bostic echoed the sentiment.

Since then, a growing chorus of Fed officials has pushed back against the possibility of pausing rate hikes in September, arguing that ingrained inflation expectations will damage the economy more than higher rates. A hot May CPI will surely add more weight to this resistance.

Benchmark 10-year Treasury yields jumped above 3% on speculation that inflation has not cooled and the Fed will, indeed, march on with aggressive tightening. Higher rates weigh on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

The dollar picked up 0.3% against major rivals on the hawkish rate view, pressuring gold and other commodities by making them more expensive in other currencies.

Wall Street initially rallied on momentum from Friday’s jobs data, only to surrender almost all those gains later in the session on the rate outlook.

The other precious metals were higher, with silver adding 0.8% while platinum and palladium rose 1.3% and 0.5%, respectively.

At the Comex close: August slid $6.50 to $1,843.70; July silver added 18 cents, to $22.09; July platinum picked up $13.60 to $1,030; and September palladium rose $10.20 to $1,996.10 an ounce.