Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold jumped 1.5% to close at a two-week high near $1,158 as the dollar, stocks, and bond yields all fell, boosting demand for alternative assets. It was the metal's fourth winning session in a row.

The dollar fell more than 0.5% against major rivals as traders booked year-end profits from its stunning recent rally. The buck has spiked more than 5% higher since Donald Trump's election in early November, pressuring gold and other commodities denominated in it for international trade by making them more expense overseas.

Trump's campaign promises to rebuild infrastructure while slashing taxes and raising tariffs are considered highly inflationary, increasing the chances of accelerated rate hikes in 2017. Higher rates attract forex investment seeking higher yields, bidding up the dollar.

While higher inflation may weigh on gold in the short term by boosting the buck, it likely to be bullish for the metal in the longer term as investors seek hedges to protect purchasing power. Historically, gold has done well during periods of rapidly accelerating inflation.

Stocks also rolled back slightly in light trade as the Trump bounce appears to be exhausting itself. In addition, the U.S. trade deficit widened in November on the stronger dollar as exports became more expensive to foreign buyers, creating a drag on Q4 GDP growth.

Treasury prices rose and yields fell on solid demand in the year's final debt auction.

The other precious metals were mostly higher. Silver and palladium both added 1.1% while platinum dipped 0.1%.

At the Comex close: February gold jumped $16.80 to $1,157.70; March silver gained 18 cents to $16.22; January platinum dipped 90 cents to $903.10; and March palladium rose $7.40 to $674.90 an ounce.