Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold fell 1.4% to close at a two-week low under $1,233 as upbeat data and hawkish comments from more Fed officials rallied the dollar, reducing demand for alternative stores of value.

Jobless claims fell 19,000 to 223,000, the lowest level in 44 years, showing solid momentum in the labor market. In addition, the personal consumption expenditures (PCE) index surged 1.9% for the 12 months through January, its biggest rise in more than four years.

The tighter job market and rising inflation could tip the Fed into raising rates when it meets later this month, despite moderating economic growth this quarter. The Atlanta Fed announced yesterday that real GDP is up just 1.8% through February, falling short of 2016's meager growth of 1.9%.

Two prominent Fed officials signaled today that a rate hike is coming soon. Fed Governor Jerome Powell said "the case for a rate increase in March is coming together." And Fed Governor Lael Brainard said separately that "near-term risks" are balanced and gradual rate hikes will be appropriate "soon." These follow similarly hawkish statements from New York Fed President William Dudley and San Francisco Fed President John Williams earlier this week.

The dollar jumped another 0.4% to reach a two-month high on the rising rate outlook, pressuring gold and other commodities denominated in it for international trade. CME Fedwatch raised the odds for a March hike to almost 80%, up from 66% yesterday and 35% the day before.

The other precious metals fell harder, with silver plunging 4% while platinum and palladium lost 2.9% and 1.2%, respectively.

At the Comex close: April gold fell $17.10 to $1,232.90; May silver plunged 74 cents to $17.75; April platinum dropped $29 to $989.90; and June palladium lost $9.25 to $769.75 an ounce.