Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold slid 0.2% to close at $1,255.50 after upbeat U.S. data reinforced the likelihood of a rate hike in December, boosting the dollar and reducing demand for alternative assets. The metal still finished the week 0.3% higher.

U.S. retailed sales rebounded in September, rising 0.6% after falling 0.2% in August, behind a surge in auto sales. So-called core retail sales�minus foodservice, autos, gasoline, and building materials�were less robust, edging up 0.1%.

Wholesale inflation rose last month, picking up 0.3% after a flat August, according to the Producer Price Index published by the Commerce Department. For the year through September, the PPI picked up 0.7%, the most in 21 months.

On the other side of the ledger, consumer sentiment plunged to a 13-month low, according to the University of Michigan survey, on uncertainty about the U.S. presidential election. The Atlanta Fed lowered its GDP forecast for Q3 to just 1.9%, down from 2.1% last week and 3.9% six weeks ago.

The net-positive data boosted the dollar by 0.5% against a basket of rivals as traders speculated that the Fed is more likely to raise interest rates in December. CME Fedwatch now puts the odds at almost 70%, up from 65% yesterday. A rising dollar weighs on gold and other commodities by making them more expensive overseas.

The buck's gains were capped, however, and gold's slide was stemmed by Fed Chair Janet Yellen's statement late in the session that a "high pressure economy" may be needed to heal the damage left by the 2009 financial crisis. In other words, inflation may have to run above the current 2% target in order to reboot U.S. productive capacity, which would mean holding interest rates low for longer than is currently expected.

The other precious metals were mixed on the day and week. Silver edged down 0.1% but gained 0.4% this week. Platinum gained 0.7% but still incurred a weekly loss of 2.4%. Palladium was up 1.8% on the day bit down 2.9% on the week.

At the Comex close: December gold slid $2.10 to $1,255.50; December silver dropped 2 cents, to $17.44; January platinum added $6.60, to $939.50; and December rose $11.45 to $648.30 an ounce.