Inflation Scorecard: Gold Backs and Fills


"Gold backed off after reaching new nominal high against USD."

Real-time Monetary Inflation (last 12-months): -3.0%

Gold backed off after reaching a new nominal high against the USD early this week. The greenback was the only reserve currency to yield new high ground to the metal. Gold appreciated 0.8% against the euro, but ended 0.2% lower priced in sterling, down 0.9% against yen and off 1.5% in Swiss franc.

Benchmarks for the U.S. currency Thursday included:
  • London morning gold fixes averaged $1,243 and ended 0.1% lower at $1,233; COMEX spot settlements finished 0.2% lower at $1,245 after averaging $1,243, COMEX gold volume spiked 55,442 contracts, or 55.0%, higher week-over-week to average 154,009 contracts daily; gold open interest increased 4.1%, or 23,488 contracts, to 593,232; COMEX warehouse stocks of bullion rose by another 62,960 oz. to 10.859M, sufficient to cover 18.3% of open interest.
  • Three-month London gold lease rates continued rising, climbing by 10 basis points (.10%).
  • Outsized volatility in the gold E&D sector accounted for the 2.2 decline in stocks tracked by the Market Vectors Junior Gold Miners ETF (GDXJ). Major producers making up the Market Vectors Gold Miners ETF (GDX) slid 1.5%; S&P500 Composite gave up 3.8%, boosting its correlation to the GDX stocks 9 percentage points to 51%; against bullion, S&P500's correlation eased by a percentage point to -16%.
  • One-year rates implied in the COMEX gold futures term structure slipped to 0.33%, a 3-point premium over Treasuries.
  • 30-year Treasury bond yields dipped another 3 basis points to 4.09%; as a result, the Treasury curve flattened by 7 points to 3.97%.
  • The U.S. dollar lost 0.3% against the euro this week; the average cross rate in interbank trading was $1.2274.
  • 1-year monetary disinflation eased to -2.8% from -3.6%; at today's rate, the real return on 3-month Treasury Bills is 321 basis points.
Real-Time Monetary Inflation Index
Real-Time Monetary Inflation Index

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