Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.2% to close under $1,766 as bond yields rose on inflation concerns and expectations that the Fed will reduce monetary easing soon, pressuring alternative stores of value.

Benchmark 10-year Treasury yields pushed temporarily above 1.6% for the first time since June as persistent global inflation is causing traders to sell off government debt. The break-even rate on five-year TIPS, considered a market-based measure of US inflation expectations, rose to the highest level since 2005.

When inflation expectations are rising, bond investors sell off lower-yielding debt, demanding higher yields to compensate for tying up money that will erode in future purchasing power.

With inflation holding at a 30-year high, the Fed has signaled its intention to start tapering its $120 billion-per-month program of buying bonds, known as quantitative easing, probably in November or December. The end of QE is a prerequisite to raising interest rates, the Fed's favorite tool to combat inflation.

While rising inflation is bullish for gold as a hedge against loss of purchasing power, higher US interest rates are usually a headwind because, by supporting the dollar, they make gold and other commodities more expensive in other currencies.

Other central banks are facing similar circumstances. New Zealand is having its strongest inflation in more than a decade. Bank of England Governor Andrew Baily said this weekend that the BoE is gearing up for a rate hike to contain rising prices.

Gold's losses were capped by concerns about slowing global growth. China's GDP fell to 4.9% in the third quarter, the lowest since 2020, because of supply-chain bottlenecks and debt problems in its highly-leverage property sector, which comprises a quarter of its economy. US factory output fell by the most in seven months, also on shortages.

The other precious metals were also lower, with silver dropped 0.4% while platinum and palladium lost 2% and 3.1%, respectively.

At the Comex close: December gold slipped $2.60 to $1,765.70; December silver dropped 9 cents to $23.26; January platinum lost $21 to $1,037.90; and December palladium fell $63.50 to $2,013.10 an ounce.