Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold dipped 0.1% to close at $1,176.50 after being whipsawed by conflicting forces. The metal first jumped as high as $1,190 early in the session on flights to safety after Italy voted to reject constitutional reforms. It then plunged as low as $1,159 on strong U.S. data and hawkish comments from the Fed, before bouncing back as the dollar weakened on a rebound in the euro.

On Sunday, Italy voted against constitutional reforms advocated by Prime Minister Matteo Renzi, prompting his resignation. Though widely expected, the decision roiled the Italian banking sector and triggered fears of financial contagion in the Eurozone, boosting demand for safe-haven assets.

Gold was then pressured by statements from Chicago Federal Reserve President Charles Evans, who said that he expects additional rate increases in the near future. "We are on the cusp of a period of rising interest rates," Evans told reporters. Rising rates typically pressure gold by boosting the dollar, which makes commodities more expensive overseas because they are denominated in the currency for international trade.

In addition, new data from the ISM showed U.S. services strengthened in November to the highest level in a year, furthering the case for higher rates in 2017.

After sliding from intraday highs to intraday lows on the ISM data and Evans comments, gold then bounced back to close the session nearly flat as the dollar slid to losses of 1.3% against major rivals. The euro led the way against the buck, rebounding from an 18-month low for its best day in six months after Renzi signaled that his pro-euro government will continue until the next general election in 2018, allaying worries about contagion.

The other precious metals finished higher, with silver gaining 0.4% while platinum and palladium added 0.6% and 0.1%, respectively.

At the Comex close: February gold edged down $1.30 to $1,176.50; March silver gained 7 cents to $16.90; January platinum for delivery climbed $5.90 to $938.60; and March palladium added 55 cents to $746.05 an ounce.