Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.5% to close at $1,226.50 after strong economic data boosted the likelihood of a rate hike from the Fed later this month. The metal ended the week 2.5% lower after posting gains for the previous four weeks. However, it then bounced as high as $1,237 in electronic trade after Fed Chair Janet Yellen left the door open to postponing the rate hike until a subsequent FOMC meeting.

Almost every segment of the U.S. economy is growing, the Institute for Supply Management reported today, after 33 of 36 industries expanded in February, the most in three years. Manufacturing is especially robust, with the ISM index reaching its highest level in two years.

Coming one day after February's PCE index report showed annualized inflation rising to the highest level in nearly five years, the ISM data boosted the odds of a rate hike when the Fed meets in two weeks.

Janet Yellen seemed to reinforce the idea of a March rate hike during a speech in Chicago, saying that "a further adjustment" of rates would "likely be appropriate.� However, she qualified that statement by saying inflation and employment must "evolve in line with our expectations."

The dollar initially rose after Yellen's speech, pressuring gold and other commodities, as rising interest rates boost the currency by drawing foreign exchange investment in search of higher yields.

But the dollar quickly fell to a loss of 0.6% after traders interpreted Yellen's qualifying remarks as giving the Fed latitude to postpone a rate hike if next Friday's nonfarm payrolls report is weaker than forecast. Gold quickly erased its losses in after-hours trade, pushing back to up $1,237 on the weaker dollar.

The other precious metals were mixed for the day and lower for the week. Silver edged down one cent today for a weekly loss of 3.6%. Platinum rose 0.4% but still lost 3.6% this week. Palladium slid 0.3% today and 0.7% this week.

At the Comex close: April gold fell $6.40 to $1,226.50; May silver dipped one cent to $17.74; April platinum rose $4.20 to $992.10; June palladium dropped $2.05 to $767.70 an ounce.