Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold edged slightly higher to close above $1,332 as traders awaited the release of the minutes from the Fed's January meeting. The metal then jumped above $1,338 after hours on the Fed's inflation view, only to slide to $1,325 on expectations of faster rate hikes.

The transcript from Federal Reserve's last meeting showed many members expect inflation to accelerate this year and approach the target of 2%, yet only a few think the economy is at risk of overheating. As a result, the central bank signaled that "a gradual upward trajectory of the federal funds rate would be appropriate."

Gold initially jumped on the Fed's view that inflation will pick up this year. Historically, the metal has performed best during periods of rising inflation as investors seek to hedge against loss of purchasing power.

But as traders digested the minutes, the dollar gained 0.4% on speculation that higher inflation could prompt the Fed to accelerate the pace of rate hikes despite the majority view that the economy is not in danger of overheating. Higher rates attract foreign exchange investment seeking higher yields, pressuring gold in turn by making it more expensive overseas.

The other precious metals were mixed before and lower after the Fed minutes. Silver closed 18 cents higher at $16.62 before retreating to $16.45. Platinum fell $8.30 to close at $996.60, then slipped another $4 after hours. Palladium dropped $4.50 to $1,022.50, then slid further in electronic trade to $1,016.15 an ounce.