Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rose than 0.1% to close above $1,784 on demand for inflation hedges after another key gauge showed prices rising at the fastest pace in decades. The metal ended a four-session losing streak despite a spate of strong US economic data as bargain-hunters returned to the market.

The Fed's preferred inflation gauge, the PCE index, jumped another 0.6% in October, pushing the annualized inflation rate to 5%, the highest since December 1990. The so-called core rate, excluding volatile food and energy costs, rose to 4.1%, also the most in 31 years.

Despite roaring inflation, consumer spending surged last month by 1.3%, handily more than forecasts. While 0.7% of the increase, roughly half, was attributable to higher prices paid, the jump signals renewed vigor in the economy to close the year. Consumer spending comprises around 70% of GDP.

Separately, the Commerce Department said the economy grew at a revised 2.1% in Q3, up from 2% initially reported, with consumer spending accounting for most of the revision.

First-time jobless claims fell by 71,000 to just 199,000 last week, the lowest level since 1969. Given the strong labor market and stronger inflation, more Fed members are advocating a quicker end to emergency monetary stimulus.

San Francisco Fed President Mary Daly said today that a faster taper would be appropriate if jobs and inflation data continue at current levels. Vice Chair Richard Clarida has already recommended speeding up the taper when the Fed meets in December.

The dollar rose 0.4% against major rivals on speculation that the Fed will, indeed, accelerate the end of its bond buying program and raise interest rates by June. Higher rates lift the dollar by attracting Forex investors seeking higher yield.

Also supporting the buck, the ECB has indicated that it will not raise interest rates in the near future because of slower Eurozone growth. The prospective divergence in monetary policy weakened the euro to a 16-month low against the dollar.

A stronger dollar typically weighs on gold and other commodities by making them prices in other currencies.

The other precious metals were mostly higher, with silver and platinum adding 0.3% and 1.3%, respectively, while palladium slid 0.1%.

At the Comex close: December gold gained 50 cents to $1,784.30; December silver climbed 6 cents to $23.50; January platinum added $11.10, to $975.30; and December palladium lost $2.40 to $1,847.90 an ounce.