Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold tumbled 3.3% to close at a three-month low under $1,270 as Brexit fueled a rally in the dollar. Once support was broken at $1,300, stop-loss orders fueled a technical sell-off that drove the metal to its biggest daily loss in nearly three years.

The dollar rallied 0.4% against major rivals and jumped to a new 31-year high against the UK pound as traders became increasingly anxious about Britain's exit from the European Union. Primes minister Theresa May announced on Sunday an aggressive new plan to break from the bloc beginning in March 2017, with full separation within two years.

The buck was also supported by growing expectations that the Fed will raise U.S. interest rates before the year is out. Cleveland Fed President Loretta Mester said the central bank may tighten policy in November. Jeffrey Lacker of the Richmond Fed called for hiking before inflation rises to the 2% target. CME FedWatch now places the odds of a December rate increase at 63%.

Higher rates strengthen to dollar by drawing forex investment searching for higher yields. A stronger dollar weighs of gold and other commodities denominated in it by making them more expensive for users of other currencies.

Meanwhile, the IMF cut its growth forecast for the U.S. by 0.6% to just 1.6%, citing "new weakness" in the U.S. and ongoing concerns about weakness in Europe and China.

The other precious metals also fell, with silver plunging 5.8% while platinum and palladium lost 1.8% and 1.7%, respectively.

At the Comex close: December gold tumbled $43 to $1,269.70; December silver lost $1.09 to $17.78; January platinum dropped $18.60 to $990.50; and December fell $12.25 to $699.55 an ounce.