Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold finished lower for a third session, sliding 0.5% to close at $1,334.50, after hawkish comments on interest rates from a prominent Fed official boosted the dollar, reducing demand for alternative stores of value. The metal held on to score its second weekly win in a row, gaining 0.6% for the week.

Eric Rosengren of the Boston Fed said today that he supports "continuing to pursue a gradual normalization of monetary policy� in order to prevent asset markets from becoming too frothy. A voting member of the FOMC, Rosengren thinks leveraged markets like commercial real estate have "become too ebullient" and imbalanced from low rates.

The dollar jumped nearly 0.5% after Rosen's comments, pressuring gold and other dollar-pegged commodities, as traders recalibrated the likelihood of rate increase this month. CME FedWatch pushed the odds of a September hike up to 27% from 15% the day before. However, only 13% of economists surveyed by the Wall Street Journal this week expect the Fed to move this month, while 71% see the next hike coming in December.

Countering Rosen's hawkish stance, two other Fed officials were less eager to hike. Dallas Fed President Robert Kaplan said the FOMC can afford to be "patient and deliberate in its actions." Fed Governor Daniel Tarullo said he questions the economy's momentum after weak ISM data and flat hiring, and wants more evidence of inflation before tightening monetary policy.

The other precious were down for the day and mostly higher for the week. Silver dropped 1.6% to close the week virtually unchanged. Platinum also fell 1.6%, closing the week 0.5% higher. Palladium dropped 1.2% but notched a weekly gain of 0.9%.

At the Comex close: December gold slid to $1,334.50; December silver dropped 31 cents to $19.37; October platinum fell $17.20 to $1,067.50; and December palladium lost $8.40 to $679.45 an ounce.