Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold tumbled 2.5% to close under $1,050, its lowest finish since 2009, as the dollar rallied in the wake of yesterday's rate hike from the Federal Reserve, pressuring commodities and reducing demand for alternative stores of value.

The Fed's decision to lift interest rates by a scant quarter-point from near zero was widely anticipated. But the dovishness of its accompanying statement emphasizing a gradual pace for future hikes and careful attention to low inflation took the market somewhat by surprise, causing the dollar to fall immediately after the announcement.

Today, the buck rebounded in a delayed response, picking up 1.4% against a basket of rivals as traders exploited the divergence between tighter U.S. monetary policy and looser money overseas. A rising dollar weighs on commodities denominated in dollars for international trade by making them more expensive to foreign buyers.

Oil prices also tumbled back under $35 per barrel, further pressuring gold, which is often viewed as a hedge against energy-driven price-inflation.

The other precious metals also fell hard, with silver losing 3.8% while platinum and palladium shed 3.6% and 2.5%, respectively.

At the Comex close: February gold tumbled $27.20 to $1,049.60; March silver lost 54 cents to $13.70; January platinum shed $31.30 to $844.70; and March palladium surrendered $14.50 to $557.45 an ounce.