Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold slipped 0.5% to close under $1,228 as the dollar rose ahead of the conclusion of the Fed's meeting on monetary policy. The metal then bounced as high as $1,230 before sliding back under $1,225 in electronic trade after the central bank kept interest rates and forward guidance in place.

The Federal Reserve left benchmark interest rates on hold at 1.75% to 2%, as widely expected. However, the post-meeting statement upgraded the economic outlook by highlighting "strong" growth and low unemployment while acknowledging "roughly balanced" risks in the economy.

Notably, no change was made to its guidance of "further gradual increases" in rates. Given GDP of 4.1% in the second quarter, unemployment at 4.9%, and inflation now at 2.2%, traders were bracing for a possible shift towards a more aggressive tone.

The dollar rose around 0.2% ahead of the meeting, helped by upbeat economic reports. ">Private payrolls added 219,000 jobs in July, beating forecasts, and ">worker compensation rose 2.8% in the second quarter, the most in 10 years. A rising dollar pressures gold and other commodities priced in it for global trade by making them more expensive overseas.

The buck then dipped after the Fed's relatively benign statement, helping gold rebound temporarily to $1,230. But the near-certainty of a hike in September created instant selling pressure, pushing the metal back under $1,225 in after-hours trade. Higher rates pressure gold by boosting the attractiveness of the dollar.

The other precious metals are finished lower, with silver falling 0.7% while platinum and palladium lost 3.4% and 2.2%, respectively.

At the Comex close: December gold dropped $6 to $1,227.60; September silver fell 11 cents to $15.45; October platinum tumbled $28.60 to $817.20; and September palladium shed $20 to $911.90 an ounce.