Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold fell 0.5% to close just above $1,247 as sharp rallies in equities and the dollar cut into demand for alternative assets.

The Dow surged 1.6% to top 21,000 for the first time, and the S&P 500 added 1.5% to reach a record high, after Donald Trump's speech to Congress last night instilled a new round of investor optimism. While still offering no concrete policy details, Trump renewed his call for comprehensive tax cuts and $1 trillion in infrastructure spending, both of which are expected to spur economic growth.

The dollar jumped around 0.4% against major rivals after two prominent Fed officials said explicitly that a rate hike in March is increasingly likely.

New York Fed President William Dudley said late yesterday that uptrends in growth, job gains, and inflation are making the case for tightening "a lot more compelling." A close ally of Fed Chair Janet Yellen, Dudley has been a persistent dove on monetary policy. Separately, John Williams of the San Francisco Fed said, "a rate increase is very much on the table for serious consideration at our March meeting."

CME Fedwatch, which calculates the odds of rate increases based on trade in Fed fund futures, raised the odds of a March hike from 35% to 66% after the comments by Dudley and Williams. Higher rates boost the dollar by attracting foreign exchange investment in search of higher yield. A rising dollar typically weighs on gold and other commodities by making them more expensive on other currencies.

The other precious metals were mixed, with silver dipping a cent while platinum lost 1% and palladium gained 1.2%.

At the Comex close: April gold fell $6.80 to $1,247.10; May silver dipped a penny to $18.46; April platinum lost $10.50 to $1,020.70; and June palladium rose $8.15 to $779.85 an ounce.