Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose 0.5% to close near $1,785 as another hot reading on the Consumer Price Index stoked demand for inflation hedges. The metal finished the week slightly higher, adding $1.10 an ounce.

Consumer inflation rose 0.8% in November after surging 0.9% in October, driving the annual inflation rate up to 6.8%, the highest since 1982. The so-called core CPI, excluding volatile food and energy costs, was 4.9% for the past 12 months, the most in 30 years.

In line with expectations, the CPI readings are not expected to alter the Fed's plan to double the taper of monetary easing to $30 billion per month, which will put it on schedule to end the emergency program by March or April.

Wall Street rose modestly on the data, with investors relieved that inflation was not even hotter. The Dow picked up 0.3% while the S&P 500 rose 0.5% and the Nasdaq 0.2%.

Benchmark 10-year Treasury yields declined slightly, pulling back under 1.49% investors await next week's Fed meeting for additional clarity about the direction of monetary policy. Falling yields lift gold by reducing the opportunity cost for holding it instead of bonds.

The dollar also retreated on the CPI print, losing 0.2% against major rivals, as Forex traders unwound positions taken in expectation of even higher inflation. A weaker dollar supports gold and other commodities by making them pricier overseas.

The other precious metals were mixed for the day and week. Silver added 0.8% today but dropped 1.3% this week. Platinum slipped 0.4% for the session but rose 0.9% for the week. Palladium fell 3.5% for the day and week.

At the Comex close: February gold gained $8.10 to $1,784.80; March silver rose 18 cents to $22.20; January platinum slipped $3.50 to $934.20; and March palladium lost $63.40 to $1,749.80 an ounce.