Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold dipped another 0.3% to close at a seven-week low near $1,220 as the prospect of an interest rate hike in coming months continues to weigh on investment demand. The metal has now lost 4% in seven sessions since the release of April's FOMC meeting minutes showing "most" Fed officials in favor of a June increase.

Fed Governor Jerome Powell became the latest U.S. central bankers to signal tighter monetary policy to come, telling the Peterson Institute that another rate increase may be appropriate "if incoming data continue to support" expectations for higher growth and lower unemployment.

Powell warned, however, that rates are likely to remain well below normal for a long time, even after inflation returns to 2%, because of low productivity and lasting damage to the economy done by the recession.

Gold's losses were stemmed by government data showing that U.S. business spending fell for a third straight month in April, causing the dollar to fall for a second day. While orders for durable goods rose because of bookings for commercial jets, core capital goods, considered a proxy for business investment, fell 0.8%. A weaker dollar typically supports gold and other commodities denominated in it for international trade by making them less expensive in other currencies.

The other precious metals finished higher, with silver adding 0.5% while platinum and palladium gained 0.1% and 2.4%, respectively.

At the Comex close: June gold dropped $3.40 to $1,220.40; July silver added 8 cents, to $16.343; July platinum picked up $1, to $995.80; and September palladium gained $12.80 to $543.65 an ounce.